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Nortel

June 13, 2005 22:00 ET

Nortel Digital Cable TV Network for China's Gansu Province to Bring Communications to Rural Areas for First Time

BEIJING--(CCNMatthews - Jun 13, 2005) -

Network to Improve Education, Health, Public Services in Underdeveloped Region

The benefits of education, health and public services communications are being extended to the predominantly rural population of China's Gansu province for the first time through a contract to deploy digital cable television (CATV) solutions from Nortel (NYSE:NT) (TSX:NT). The contract with the Broadcast and Television Bureaus of Jiuquan, Tianshui and Zhangye is estimated at US$12 million.

The new CATV infrastructure is expected to help alleviate poverty in Gansu through wider availability of such public services as education, remote diagnostic medical treatment, and business and government information for residents who currently have limited or no access to communications. Digital voice, data, video and multimedia services will be provided to residents in the Jiuquan, Tianshui and Zhangye areas.

Export Development Canada (EDC) is financing the Gansu CATV project, which is expected to be completed by the end of 2005 to meet the country's digital TV transition timetable as established by the Chinese government.

"Extending communication services to an underdeveloped region such as Gansu is vital in building a solid foundation to support programs that will ultimately improve the quality of life for people in the province," said Yuan-Hao Lin, chief technology officer, Greater China, Nortel. "The Gansu project will be Nortel's largest end-to-end solution for China's television and broadcast industry and the first CATV backbone in the province. Nortel is extremely gratified to be part of such an important element in the development of the region."

For rural and urban residential customers alike, the new CATV backbone will deliver high quality television transmission and provide access to high-speed Internet services for e-learning programs and e-government services.

For the Gansu CATV network, Nortel is integrating optical, multimedia and telephony technologies into a single converged voice, data and broadcast cable network capable of providing a wide range of value added services. The network will position Gansu cable operators to leverage fiber assets for cost-effective delivery of fully managed Ethernet services like high-speed Internet access, local area network (LAN) extension, voice and video, and optical storage services over data customer interfaces. Currently, Gansu province has a public digital data, relay and multimedia communications network that reaches every city and prefecture in the province. Several of the Gansu data networks are based on Nortel Ethernet switching and router solutions.

The new CATV network will include a variety of solutions from Nortel's data networking portfolio, including Nortel Metro Ethernet Routing Switch 8600, Service Edge Router (SER) 5500, Business Policy Switch (BPS) and VPN (virtual private network) Router 2700.

Nortel's Metro Ethernet Routing Switch 8600 combines high performance with reliability, intelligence and security, and allows for fail-safe connectivity to the network core. As a convergence device at the edge of the network, Nortel SER 5500 enables a combination of VPN, broadband aggregation and IP (Internet Protocol) services over a single converged network. With Web-based management and advanced IP Quality of Service (QoS), Nortel BPS targets resource-intensive and delay-intolerant applications such as voice over IP (VoIP), video streaming, and e-commerce. Nortel VPN Router 2700 serves as an IP access router, dedicated VPN switch or firewall - and evolves from one to another via a simple software key license.

Nortel's Metro Optical 3500 and 3400 systems will facilitate cost-efficient delivery of a variety of digital TV and high-capacity data and voice services, providing advanced bandwidth management capabilities and innovative service modules. Nortel Multimedia Communication Server 5200 will also be deployed to leverage the innovation of the Internet to deliver advanced multimedia and collaborative applications that enhance personal productivity and mobility, while simplifying communications by delivering ubiquitous access to services, independent of location.

Nortel ranked No. 1 in the global markets for both service provider softswitches and gateways as of year-end 2004, according to Synergy Research Group. With its proven voice and multimedia portfolio, Nortel is providing VoIP solutions to several leading cable operators, including Rogers Cable in Canada, Cox Communications in the United States, Charter Communications and VTR in Chile, TeleCable in Spain, Telenet in Belgium, and ish and Kabel BW in Germany.

Nortel was the first vendor to deploy full-featured, end-to-end VoIP solutions to every segment of the Service Provider market. Nortel has shipped more than 45,000 multiservice switching systems and more than 2,000 Services Edge Routers worldwide. In addition, Nortel Optical Systems are deployed in more than 1,000 customer networks in over 65 countries.

About EDC

EDC is a Crown corporation that provides trade finance and risk management services to Canadian exporters and investors in up to 200 markets worldwide. Its services include credit insurance, bonding and guarantees, political risk insurance, direct loans to buyers and lines of credit in other countries to encourage buyers to 'buy Canadian.' EDC also provides limited recourse financing arrangements and joint ventures for projects involving long-term leasing arrangements and equity participation. More information is available on EDC at www.edc.ca.

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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