O2 Expands Nortel Networks Role in Pan-European UMTS Network Buildout.

LONDON -- O2 has expanded Nortel Networks (NYSE:NT)(TSX:NT) role as an infrastructure supplier of third generation (3G) Universal Mobile Telecommunications System (UMTS) wireless infrastructure for O2's networks across the UK, Germany and Ireland. Nortel Networks will also provide some network engineering and radio optimisation services.

Under an extension to an existing supply agreement with Nortel Networks, O2 will deploy UMTS radio equipment in Eastern and Southern Germany (including Berlin) and across most regions of the British Isles. Nortel Networks was previously selected by O2 to provide GPRS and UMTS core networks.

Infrastructure deployments will expand network coverage into new regions in the UK and Germany, and position O2 to drive new revenue opportunities by offering advanced data services like mobile e-mail, video calling, mobile Internet browsing, and Multi Media Services (MMS) including streaming video and localised, personalised content.

"Nortel Networks has demonstrated 3G leadership and commitment in its current deployments and this was a major factor in our decision to award these new footprints," said Dave Williams, Group Chief Technology Officer, mmO2. "Nortel Networks will provide the necessary reliability and scalability to deliver an outstanding 3G network and will allow us to use these 3G capabilities to launch world-class services to our customers across the UK, Ireland and Germany."

"We continue to see progress in the rollout of UMTS and this is another step in our continued strategy in enabling a new era of broadband mobile service," said Peter MacKinnon, president, GSM/UMTS, Nortel Networks. "We are delighted with O2's decision to expand the scope of our contribution to their European network. Nortel Networks extensive experience in deploying large-scale wideband wireless networks gives us a big advantage in turning up UMTS in a rapid, cost-effective manner."

The contract extension expands the scope of an existing supply agreement signed by Nortel Networks and O2 on October 31, 2002. Following O2's audit of suppliers, Nortel Networks was selected as one of two infrastructure suppliers in April 2002. At that time, O2 stated that additional deployments would be awarded based on performance at a later date. This latest contract is with mmO2 Limited and O2 Operating Companies (O2 UK, O2 Ireland and O2 Germany). O2 Limited is a subsidiary of mmO2.

Nortel Networks will supply O2 with products from its Base Transceiver Station (BTS), Mobile Switching Center (MSC), Radio Network Controller (RNC), and Data Packet Core (GGSN, SGSN) technology portfolios. Nortel Networks wireless equipment is designed to easily migrate with cost-effective, modular upgrades to support higher bandwidth 3G technologies. This can eliminate the costly need to replace hardware and streamline deployment to speed time-to-market for services.

This latest selection by O2 continues Nortel Networks momentum in deploying 3G wireless networks. Nortel Networks was recently selected to deploy new UMTS coverage areas for Orange, Vodafone and Hutchinson operator Partner in Israel. AT&T Wireless has launched the first commercial UMTS networks in North America using Nortel Networks equipment.

Nortel Networks has designed, installed and launched more than 300 wireless networks in over 50 countries across the globe. Nortel Networks was the industry's first supplier with wireless networks operating in all advanced radio technologies (GSM/GPRS/EDGE, CDMA2000 1X and 1xEV-DO, UMTS and WLAN) and is the only end-to-end provider of all next generation wireless solutions.

As a global innovation leader, Nortel Networks enriches consumer and business communications worldwide by offering converged multimedia networks that eliminate the boundaries among voice, data and video. These networks use innovative packet, wireless, voice and optical technologies and are underpinned by high standards of security and reliability. For both carriers and enterprises, these networks help to drive increased profitability and productivity by reducing costs and enabling new business and consumer services opportunities. Nortel Networks does business in more than 150 countries. For more information, visit Nortel Networks on the Web at www.nortelnetworks.com or www.nortelnetworks.com/media_center.

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