Nortel

Nortel
LG Electronics, Inc.

January 23, 2005 21:02 ET

LG Electronics, Nortel to Establish Joint Venture; Plan to Provide World-Class Telecommunications, Networking Solutions for Korea and Global Markets


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: NORTEL

NYSE, TSX VENTURE SYMBOL: NT

AND LG ELECTRONICS

KSE SYMBOL: 06657

JANUARY 23, 2005 - 21:02 ET

LG Electronics, Nortel to Establish Joint Venture;
Plan to Provide World-Class Telecommunications,
Networking Solutions for Korea and Global Markets

SEOUL, South Korea--(CCNMatthews - Jan 23, 2005) -

LG Electronics (KSE:06657.KS) and Nortel(1) (NYSE: NT)(TSX: NT) today
announced the signing of a Memorandum of Understanding (MoU) to
establish a joint venture for providing high quality, leading edge
telecommunications equipment and networking solutions to Korea and other
markets globally.

The announcement of the proposed 50-50(2) joint venture framework was
made in Seoul by S.S. Kim, CEO and Vice-Chairman of LG Electronics and
Bill Owens, president and chief executive officer of Nortel.

This impending cooperation supports the strategies of both companies for
ongoing development of leading-edge telecommunications equipment and
networking solutions to ignite and power global commerce. The proposed
joint venture also reflects the companies' commitment to leverage
best-in-class resources and expertise by joining forces with leading
telecommunications players in key markets.

"To be a global communications provider, it is imperative for us to
expand our market share and compete in Asia," Owens said. "Establishing
a relationship with a world-class company is an important step. Korea is
known for advanced and trailblazing technology in communications as it
leads the rest of the world in embracing technology that enhances the
human experience."

"Nortel is a true powerhouse in the world's telecommunications equipment
market with strong technology and global competitiveness," said S.S.
Kim. "LG Electronics is a top-notch telecommunication equipment and
solutions provider, attested by its being the first in the world to
provide a WCDMA system with video telephony in late 2002. Our
joint-venture with Nortel is expected to create greater synergy between
LG Electronics' cutting-edge technology and Nortel's expertise in
delivering communications capabilities. We are confident that it will
become one of the top-ranking players in the global telecommunications
equipment market."

"Our intent is to invest in Korea to leverage the wealth of strong R&D
talent and technology steeped in LG Electronics and Nortel to develop
products and solutions for the global market," said John Giamatteo,
president, Asia Pacific, Nortel. "We also intend for the proposed joint
venture to market the entire Nortel portfolio of optical, wireless,
wireline and enterprise products in Korea and, based on mutual
discussion, in other markets as well."

"Telecommunications equipment is very closely related to mobile phones
in development," said Mun Hwa Park, President, Mobile Communications
Company, LG Electronics. "In developing hi-tech mobile phones, LG
Electronics will collaborate with Nortel to be better positioned in
setting standards for next-generation devices and developing
technologies. Based on this, LG Electronics is expected to reduce the
developing time for next-generation terminals and maintain its leading
technology in global mobile phone market."

The proposed joint venture is subject to execution of a definitive
agreement. The two companies expect to complete this transaction in the
second quarter of 2005.

(2) In the proposed joint venture, Nortel has 50 percent plus one share.

About LG Electronics

LG Electronics (Korea Stock Exchange:06657.KS), headquartered in Seoul,
South Korea, was established in 1958 and has grown into a global force
in electronics, information and communications products with annual
total revenues of US$ 29.9 billion (consolidated). With more than 64,000
employees working in 73 overseas subsidiaries and marketing units around
the world, LG Electronics is comprised of four main business companies
including Digital Display, Digital Media, Digital Appliance, and Mobile
Communications.

LG Electronics' goal worldwide is to create and enable the intelligent
networking of digital products that will make consumers' lives better
than ever. For more information, please visit www.lge.com.

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 regulatory and
criminal investigations and civil litigation actions related to Nortel's
restatements and the impact any resulting legal judgments, settlements,
penalties and expenses could have on Nortel's results of operations,
financial condition and liquidity; the findings of Nortel's independent
review and implementation of recommended remedial measures; the outcome
of the independent review with respect to revenues for specific
identified transactions, which review will have a particular emphasis on
the underlying conduct that led to the initial recognition of these
revenues; the restatement or revisions of Nortel's previously announced
or filed financial results and resulting negative publicity; the
existence of material weaknesses in Nortel's internal controls over
financial reporting; the impact of Nortel's and NNL's failure to timely
file their financial statements and related periodic reports, including
breach of its support facility and public debt obligations and Nortel's
inability to access its shelf registration statement filed with the
United States Securities and Exchange Commission (SEC); ongoing SEC
reviews, which may result in changes to our public filings; the
potential delisting or suspension of Nortel's and NNL's publicly traded
securities; the impact of management changes, including the termination
for cause of Nortel's former CEO, CFO and Controller in August 2004; 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; fluctuations in Nortel's cash flow, level
of outstanding debt and current debt ratings; Nortel's ability to
recruit and retain qualified employees; 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 flow; the adverse resolution of class actions, litigation
in the ordinary course of business, intellectual property disputes and
similar matters; 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, which is
currently not available, of Nortel's forward 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 Annual Report on Form 10-K 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.

(1) Nortel, the Nortel logo and the Globemark are trademarks of Nortel
Networks.

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