June 29, 2005 22:00 ET

China Mobile Selects Nortel to Upgrade Zhejiang Province Optical Backbone; Upgrade to Help Meet Rapid Subscriber Growth, Enable Migration to 3G Services

BEIJING--(CCNMatthews - Jun 29, 2005) -

China Mobile, the country's largest wireless carrier, has selected Nortel (NYSE: NT) (TSX: NT) to upgrade its optical backbone network in Zhejiang province to address accelerating subscriber growth and prepare for migration to third generation (3G) services. Zhejiang Mobile, a provincial affiliate of China Mobile, operates the province-wide network.

Scheduled for completion by September 2005, the upgrade from Nortel is designed to significantly enhance Zhejiang Mobile's network by helping to improve network performance, flexibility, quality of service (QoS) and operational cost-effectiveness. Zhejiang Mobile expects its subscriber base to grow from 17 million at year-end 2004 to 20 million by late 2005.

"Nortel is committed to bringing the most up-to-date technology available to China," said Yuan-Hao Lin, chief technology officer, Greater China, Nortel. "Zhejiang Mobile has been growing quickly to keep pace with the province's booming economy, and upgrade of its network is critical to maintaining high-quality services to subscribers. This Nortel upgrade is designed to help China Mobile ignite and power its strategic vision for Zhejiang Mobile while helping to reduce operating expenses."

Two Nortel optical platforms - Optical Cross Connect HDX Multiservice Switch and Optical Multiservice Edge (OME) 6500 - are being deployed in Zhejiang Mobile's provincial backbone network to optimize its existing network and increase network bandwidth in cost-effective increments.

Optical Cross Connect HDX, Nortel's flagship optical switching platform, offers unique network intelligence capabilities at the transport layer that facilitate automated set-up of end-to-end service paths across an optical switching network, enabling rapid delivery of differentiated services. Optical Cross Connect HDX supports flexible protection and restoration options, including ring and mesh, that are fully aligned with current SONET and SDH operational processes for Class of Service (CoS) differentiation that balances bandwidth efficiency and restoration speeds while providing superior flexibility in end-user Service Level Agreement (SLA) control.

The upgrade will include two Optical Cross Connect HDX switches as Hub nodes to be configured as multiple rings to optimize the backbone network. Nortel HDX cross connect capacity is scalable beyond one Terabit per second. In the Zhejiang Mobile deployment, the HDX will be provisioned initially at 640 Gigabits per second. The current HDX platform is also ready to support ASTN (Automatically Switched Transport Network) application through a simple system upgrade.

Similarly, the OME 6500 for Zhejiang Mobile will be used as a high-density service aggregator subtended under the Optical Connect HDX switch. OME 6500 is able to provide powerful next generation Layer two switching functions to support various kinds of Ethernet services. The strong VC12/VC3/VC4 cross connect capacity enables operators to deliver any future broadband voice, video and data 'triple play' services including IPTV.

Nortel OME 6500 is a next generation optical platform that converges multiple services and network layers onto a single platform. In addition to traditional electrical and optical interfaces, delivery is supported for Optical Ethernet, optical storage connectivity, and protocol- and bit-rate-transparent services. OME 6500 has been deployed in more than 35 networks around the world, including Bell Canada, Tiscali Italia, Telesur, Internet2, JiangXi Power (SPC), and SURFnet.

Deployed in more than 1,000 customer networks in 65 countries, Nortel's end-to-end optical networking portfolio includes next generation SONET/SDH, optical switching, wave division multiplexing and Optical Ethernet products. Nortel has deployed more than 290,000 optical network elements globally. Nortel was the market share leader in DWDM transport for the fifth year in a row as of year-end 2004, according to the Dell'Oro Group.

About China Mobile

A Fortune 500 company, China Mobile is the world's largest GSM carrier in terms of subscriber numbers with 210.62 million subscribers, according to China's Ministry of Information Industry (MII). China Mobile provides mobile telephony, data, IP (Internet Protocol) telephony and multimedia services, as well as Internet, fax, data, handset banking, Global Access WAP (Wireless Application Protocol) and a host of other value-added services. China Mobile (Hong Kong), in which China Mobile is a major stakeholder, is listed on the Hong Kong and New York stock exchanges. More information on China Mobile is available at

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 For the latest Nortel news, visit

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, and any related potential dilution of Nortel's common shares; 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 control over financial reporting and the conclusion of Nortel's management and independent auditor that Nortel's internal control over financial reporting is ineffective, which could continue to impact Nortel's ability to report its results of operations and financial condition accurately and in a timely manner; the impact of Nortel's and NNL's failure to timely file their financial statements and related periodic reports, including 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 Nortel's and NNL's public filings; the impact of management changes, including the termination for cause of Nortel's former CEO, CFO and Controller in April 2004; the sufficiency of Nortel's restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 2004 and December 14, 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; increased consolidation among Nortel's customers and the loss of customers in certain markets; 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 monitoring of the capital markets for opportunities to improve its capital structure and financial flexibility; 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 and consolidation 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 of Nortel's forward purchase contracts; negative developments associated with Nortel's supply contracts and contract manufacturing agreements, including as a result of using a sole supplier for a key component of certain optical networks solutions; 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 and Quarterly Report on Form 10-Q 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.

Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.

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