Renfe Selects Nortel Networks to Build GSM-R Wireless Network in Spain; Expects to Boost Railway Efficiency, Safety, Reduce Operating Costs.

Business Editors/High-Tech Writers

MADRID, Spain--(BUSINESS WIRE)--April 22, 2004

Renfe (Entidad Publica Empresarial Red Nacional de los Ferrocarriles Espanoles) has selected Nortel Networks (NYSE:NT)(TSX:NT) to build a GSM for Railways (GSM-R) wireless communications network for Spain's public rail lines in Bilbao and Santander.

Nortel Networks will provide an integrated GSM-R digital radio access network to upgrade current analogue voice systems. The new mobile network will comply with rail industry-specific EIRENE standards. It will provide for more efficient use of rail resources by positioning Renfe to operate more trains simultaneously, increase train speeds and reduce delays.

"Renfe operates one of the largest and most sophisticated rail lines in Europe, and we are very pleased to join them as a new provider of GSM-R network equipment," said Jordi Casamitjana, vice president and managing director, Iberia, Nortel Networks. "Our GSM-R solution increases network reliability and performance, which can help Renfe build even stronger customer loyalty while streamlining its communications network to reduce operating costs."

"This is an important win for us," said Vivian Hudson, president and general manager, GSM-R, Nortel Networks. "It increases our GSM-R market presence to seven countries. With more than 10 years experience in GSM-R, Nortel Networks technology covers more kilometers of railway than any other vendor."

GSM-R provides uniform transmission of voice and data between the train conductor, the train crew and operations management groups, and between the train dispatching staff and station personnel. It can also manage operational, maintenance, motor vehicle and marshalling yard radio communications.

Nortel Networks telecommunications networking experience, complemented by specialized implementation services designed specifically for the railway industry, provides an end-to-end GSM-R network solution. Nortel Networks provides a number of advantages, including a railway-customized GSM-R Base Transceiver Station for better trackside coverage under severe environmental conditions. Nortel Networks GSM-R infrastructure enhances Quality of Service and reliability, and provides clear voice and data communications for conventional and high-speed trains. Nortel Networks GSM-R offering is scalable to support GPRS and high-speed data and voice.

Nortel Networks is the world leader in GSM-R technology with more than a 60 percent share of kilometers of railway lines deployed to date. Nortel Networks is supplying GSM-R in Spain, France, Germany, the U.K., Italy, Slovakia and China. Nortel Networks is deploying nationwide GSM-R networks in France for RFF and across Great Britain for Network Rail. Nortel Networks provided the end-to-end system for Deutsche Bahn's ICE high-speed line between Frankfurt and Cologne, and supplied the high-speed line between Roma and Naples in Italy for SIRTI.

Nortel Networks has been a pioneer in the GSM-R standards process since 1992, and has worked with UIC (Union Internationale des Chemins de Fer) and ETSI (European Telecommunications Standards Institute). Nortel Networks supplied equipment for the MORANE (Mobile Radio for Railways Networks in Europe) trial and was a major contributor to the EIRENE (European Integrated Railway radio Enhanced Network) GSM-R standard.

Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at www.nortelnetworks.com or www.nortelnetworks.com/media_center.

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events.

Factors which could cause results or events to differ from current expectations include, among other things: the outcome of Nortel Networks independent review and any further restatement of its previously announced or filed financial results; the impact of the inability to meet Nortel Networks filing obligations on credit and support facilities and public debt obligations; the sufficiency of Nortel Networks restructuring activities, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; continued reductions in spending by Nortel Networks customers; fluctuations in Nortel Networks operating results and general industry, economic and market conditions and growth rates; the communication by Nortel Networks auditors of the existence of material weaknesses in internal control; Nortel Networks ability to recruit and retain qualified employees; fluctuations in Nortel Networks cash flow, level of outstanding debt and current debt ratings; Nortel Networks ability to meet the financial covenants in its credit facilities; the use of cash collateral to support Nortel Networks normal course business activities; the dependence on Nortel Networks subsidiaries for funding; the impact of Nortel Networks defined benefit plans and deferred tax assets on results of operations, Nortel Networks cash flows and compliance with financial covenants; Nortel Networks dependence on new product development and its ability to predict market demand for particular products; Nortel Networks ability to integrate the operations and technologies of acquired businesses in an effective manner; the impact of rapid technological and market change; the impact of price and product competition; barriers to international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization in the telecommunications industry; changes in regulation of the Internet; the impact of the credit risks of Nortel Networks customers and the impact of customer financing and commitments; stock market volatility generally and as a result of acceleration of the settlement date or early settlement of Nortel Networks purchase contracts; risks associated with a consolidation of Nortel Networks common shares; the impact of Nortel Networks supply and outsourcing contracts that contain delivery and installation provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; the future success of Nortel Networks strategic alliances; and the adverse resolution of litigation, investigations, intellectual property disputes and similar matters.

For additional information with respect to certain of these and other factors, see the most recent Form 10-Q/A and Form 10-K/A filed by Nortel Networks with the United States Securities and Exchange Commission. Unless otherwise required by applicable securities laws, Nortel Networks disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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