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Nortel

August 29, 2005 22:00 ET

Converged Networking Solutions from Nortel to Power China Life-Saving Initiative; Five Water Utilities Integrate Communications to Monitor Flood-Prone Rivers

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

To protect against loss of life from catastrophic floods that hit China each year during the annual rainy season, five major China water resource utilities are establishing critical, real-time flood control monitoring and drought relief systems based on converged voice, data and multimedia networking solutions from Nortel (NYSE:NT)(TSX:NT).

According to China's Ministry of Water Resources, floods, typhoons and landslides triggered by heavy rains have struck 27 of China's 31 mainland provinces so far in 2005 and the current flood season is far from over. While seasonal downpours are causing problems in some provinces, other areas of China are suffering from drought.

The five utilities establishing integrated life-saving flood monitoring and drought relief systems using Nortel technology include the water resource departments of Guangdong province, Anhui province, and Henan province, and the water resources commissions of Huai River and Hai River. The Nortel solutions will also enable improved water resources management, and 'anytime, anywhere' communications for utilities personnel.

"Nortel technology is set to play a key role in protecting the Chinese people against the devastation of seasonal floods and droughts as we work with the water resource utilities of these five flood-susceptible areas to enable new levels of collaboration and real-time information sharing," said Stephen Tsui, chief operating officer, Greater China, Nortel. "We have a proven track record of helping China's water resources industry protect business-critical information, streamline communication, drive cost-efficiencies, and enhance the human experience for employees and end-users. That now includes helping save lives."

The current contract builds on an earlier Nortel success with the Water Resources Department of Anhui province. In 2004, the Anhui department deployed a provincial backbone, based on Nortel multiservice switches, for a flood control and drought relief project covering the Huai River and the Yangzi River. The project involved connecting various water resources management functions across the region, and integrating data, voice, fax and video traffic over a single WAN (wide area network) link for branch offices, regional offices and central sites.

During the 2004 and 2005 rainy seasons, according to Anhui Water Resources Department engineering personnel, the Nortel solution successfully demonstrated its carrier-grade reliability, stability and quality in providing the data required for effective flood monitoring and the protection of lives and property.

The Nortel systems deployed by the five water utilities comprise a number of key products and solutions in Nortel's e-Government portfolio. These include the high-capacity Nortel Ethernet Routing Switch 8600, Multiservice Switches, VPN (virtual private network) routers, and Multiservice Access Switches as well as a range of Nortel IP telephony solutions based on Nortel Communication Server 1000 and Nortel Multimedia Communication Server 5100.

Nortel is a leading provider of communications solutions for utility companies worldwide, leveraging expertise in such new technologies as IP telephony, Optical Ethernet, and advanced multiservice switching. In China, Nortel has a long history of providing enterprise information networking across a broad range of industries. In addition to utilities, Nortel supplies communications solutions designed to be secure and reliable to energy, educational, financial and government institutions.

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, 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; any undetected product defects, errors or failures; 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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