Taipei's Mobile City Project Selects Nortel Wireless Mesh Network Solution; Plans to Provide High-Speed Broadband Wireless Access, New Services.

TAIPEI, Taiwan -- Taipei City's "M-City" (Mobile City) project has selected a Wireless Mesh Network solution from Nortel (NYSE:NT)(TSX:NT) to provide high-speed wireless local area network (LAN) broadband access and new wireless services in Mass Rapid Transportation stations, selected commercial buildings and other key locations across the city.

The Taipei City Government evaluated numerous bidders for months before recently signing a contract with Qware, which plans to operate a wireless broadband network based on Nortel's Wireless Mesh Network solution. Qware has issued a Notice of Award to Nortel and the parties are currently negotiating a supply agreement. Qware expects to have 10,000 wireless access points in service by year-end 2005 to provide coverage for Taipei City, an area of 272 square kilometers where 90 percent of Taipei's 2.65 million people live.

"Our selection of Nortel was based on its unparalleled experience in deploying numerous wireless networks worldwide," said C.S. Lin, chairman of Qware and chief executive officer of President Group. "With powerful business models for government applications, enterprises, and wireless and wireline service providers, Nortel's Wireless Mesh Network solution enables delivery of secure wireless broadband services that can provide a cost-effective method for extending wireless LAN coverage more broadly into business and end-user markets."

"We are happy to help Taipei City Government to realize the M-City plan to enhance the human experience through reliable and secure communications," said Robert Mao, president and chief executive officer, Greater China, Nortel. "Nortel is breaking new ground and leading the wireless broadband evolution by providing our customers and allies with innovative wireless mesh network technology. By making the project a success, we also introduce the experience to other cities in China and other parts of the world."

For this project, Nortel will provide its Wireless Mesh Network solution, including the Nortel Wireless Access Point 7220, Wireless Gateway 7250, Nortel Optivity Network Management System, and other related network management elements. Nortel's Wireless Mesh Network solution uses IEEE 802.11 standards, allowing users with Wi-Fi enabled laptop computers or handheld computing devices to access the network without new hardware or software.

Nortel's Wireless LAN portfolio is comprised of two powerful, complementary offerings: the WLAN 2200 series, which was introduced in March 2003, and the Wireless 7200 series, the Wireless Mesh Network solution.

About Qware Systems

Established in 1975, Qware Systems was an IT components and systems trading company which over 23 years transformed into an IT information services company by 1998. Prior to being acquired by President Group, it was Wang Lab's Taiwan branch. It currently provides a diverse range of products covering hardware and software solutions including information security, wireless and ASP service systems together with professional engineering services. Qware solved the constraints of previous System Integrators model and has successfully become a leading network-based information service company. For further information about Qware Systems, please visit www.qware.net.

About Nortel

Nortel is a recognized leader in delivering communications capabilities that enhance the human experience, ignite and power global commerce, and secure and protect the world's most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the world's greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at www.nortel.com. For the latest Nortel news, visit www.nortel.com/news.

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's independent review and planned restatement or revisions of its previously announced or filed financial results; the resolution of the accounting issues announced on Nov. 11, 2004, including the outcome of discussions with the United States Securities and Exchange Commission (SEC); the impact of the management changes announced on April 28, 2004 and August 19, 2004; the impact of the inability to meet Nortel's filing obligations on support facilities and public debt obligations; any potential delisting or suspension of the Company's or NNL's securities; the adverse resolution of litigation, investigations, intellectual property disputes and similar matters; the sufficiency of Nortel's restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 2004, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; cautious or reduced spending by Nortel's customers; fluctuations in Nortel's operating results and general industry, economic and market conditions and growth rates; the communication by Nortel's auditors of the existence of material weaknesses in internal controls; Nortel's ability to recruit and retain qualified employees; fluctuations in Nortel's cash flow, level of outstanding debt and current debt ratings; the use of cash collateral to support Nortel's normal course business activities; the dependence on Nortel's subsidiaries for funding; the impact of Nortel's defined benefit plans and deferred tax assets on results of operations and Nortel's cash flows; Nortel's dependence on new product development and its ability to predict market demand for particular products; Nortel's 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's 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's purchase contracts; the impact of Nortel's 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; and the future success of Nortel's strategic alliances.

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 with the SEC. Unless otherwise required by applicable securities laws, Nortel 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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