Nortel
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TSX : NT

Nortel

June 29, 2005 17:00 ET

Harry J. Pearce Becomes Nortel Chairman of the Board

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

Lynton R. (Red) Wilson Retires as Chairman

Nortel Networks Corporation (NYSE:NT)(TSX:NT) today announced the appointment of Harry J. Pearce as its non-executive chairman of the board. Mr. Pearce replaces Lynton R. (Red) Wilson, who has served as chairman since November 2001.

Mr. Pearce, 62, of Bloomfield Hills, Michigan, United States, has been a director of the Company since January 11, 2005 and a director of Nortel Networks Limited since January 18, 2005. Mr. Pearce was Chairman of the Board of Hughes Electronics Corporation (now The DIRECTV Group, Inc.), a company engaged in digital television entertainment, broadband satellite and network services as well as global video and data broadcasting, from June 2001 to January 2004. He was a director and Vice-Chairman of General Motors Corporation from January 1996 to June 2001. Mr. Pearce is also a director of Marriott International, Inc. and MDU Resources Group, Inc.

Commenting on his appointment as chairman of the board, Mr. Pearce said, "Nortel is at the center of the breakthrough technologies that are advancing global communications. I am a firm believer in Bill Owens' leadership, the passion and commitment of Nortel employees, and the ability of this Company to continue as a driving force in the communications industry. I look forward to the opportunities ahead in rebuilding shareholder value and confidence."

In addition, the following new nominees were elected to the board of directors of the Company: Jalynn Bennett of Toronto, Ontario; The Hon. James B. Hunt, Jr. of Raleigh, North Carolina; John McNaughton of Toronto, Ontario; and Ronald Osborne of Toronto, Ontario.

Previously serving directors re-elected to the board today are: Dr. Manfred Bischoff, Robert Brown, John Cleghorn, Robert Ingram, The Hon. John Manley, Richard McCormick, William A. Owens and Harry J. Pearce.

In addition to Mr. Wilson, previously serving directors The Hon. James Johnston Blanchard, L. Yves Fortier, Guylaine Saucier, and Sherwood Hubbard Smith, Jr. did not stand for re-election to the Company's board.

Commenting on Mr. Wilson's service to Nortel, Bill Owens, vice chairman and chief executive officer, Nortel, said, "Nortel owes a profound debt of gratitude to Red Wilson for his leadership and contribution to the Company during a dynamic period in the Company's history."

Mr. Wilson has served as a director of the Company since March 2000 and of its principal operating subsidiary, Nortel Networks Limited, since April 1991. Acknowledging his valued contribution and service, Nortel's board of directors recently conferred the honorary designation of "Chairman Emeritus" on Mr. Wilson.

In addition to Mr. Wilson, Owens acknowledged the many years of contribution and service to the Company and Nortel Networks Limited by retiring directors, Blanchard, Fortier, Saucier, and Smith, Jr. "Nortel is deeply grateful to these individuals for their time and dedication to the Company," said Owens. "I am honored to have served alongside these extraordinary people who continually operated with the highest integrity and commitment throughout their tenure at Nortel."

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; 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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