June 27, 2005 09:52 ET

Nortel Introduces Velocity Incentives for North American Channel Partners; Designed to Help Partners Drive Increased Profits from Convergence Solutions

TORONTO--(CCNMatthews - Jun 27, 2005) -

Nortel (NYSE:NT)(TSX:NT) today introduced a suite of Velocity Incentives for North American Channel Partners designed to help drive increased profits, incremental marketing funds and increased growth rebates.

The addition of the Velocity Incentives to Partner Advantage, Nortel's existing North American channel program, will provide substantial benefits to channel partners who lead with Nortel converged solutions while meeting the highest service and support standards in the industry.

Velocity builds on the award-winning Partner Advantage program, demonstrating Nortel's commitment to partner profitability and growth by providing a suite of incentives designed to support and recognize partners selling Nortel converged voice, data and applications solutions.

Specifically, the new Velocity Incentives will give channel partners the opportunity to increase profitability, decrease equipment costs, and realize greater overall rewards in the Partner Advantage program by focusing on selling converged solutions from Nortel. The incentives will also provide increased rewards for those partners that are strategically aligned with the needs of enterprise customers.

"Nortel continues to build its channel program in lock-step with the company's strategic technology initiatives," said Ken Presti, research director of IDC's Network Channels and Alliances service. "There is a clear emphasis on growing a channel program that encourages partners to evolve in parallel with the direction of the market, while at the same time supporting those partners with a straightforward and streamlined channel program."

"The Velocity incentives within Partner Advantage demonstrate Nortel's commitment to partner profitability and recognition of partner loyalty," said Tony Parella, president and chief executive officer, Shared Technologies. "Nortel has an extensive portfolio of converged voice, data and application solutions, and we are excited to be part of a program that rewards us for delivering the most innovative solutions to our customers. Nortel hit the right note with Partner Advantage and, with the addition of the Velocity Incentives, Nortel is once again extending their commitment to profitability and growth in the areas most important to us and our customers."

"The Velocity Incentives are unique in the industry," said Malcolm Collins, president, Enterprise Networks, Nortel. "We believe that no other communications equipment manufacturer is offering this type of program to channel partners today. Nortel recognizes the value of its channel partners, and this program helps our partners to better position themselves in the marketplace."

"In addition, the focus on converged voice, data and applications will assist our partners in aligning with Nortel's strategic direction and give them the opportunity to benefit from our technology and market leadership," Collins said. "Partner Advantage was created to drive profitability, growth and customer satisfaction. The Velocity Incentives are a further demonstration of that commitment."

"We built Partner Advantage to serve as a foundation which would be flexible enough to meet the changing needs of our customers," said Rob Cullen, vice president, Global Solutions Marketing, Nortel. "Velocity recognizes the speed required to address growing demand for converged solutions. Nortel is providing its partners with a simple and compelling suite of programs, and providing customers with best-in-class products, solutions and support."

Velocity introduces the following benefits to the Advantage community of partners:

-- Marketing Allowance Fund (MAF) accruals are now more heavily weighted towards converged voice, data and application products, providing partners the opportunity to expand co-marketing activities based on the sale of convergence solutions.

-- Growth Rebates now provide multipliers for growth in the converged voice, data and applications portfolios, resulting in incremental rewards for the sale of converged solutions.

-- Launch of the 'Select' programs designed to reward partners delivering best-in-class converged solutions.

-- A new Partner Awards program will offer partner recognition for innovation, growth and customer satisfaction.

Partner Advantage is founded on the principles of mutual profitability, growth, commitment and brand. The Advantage architecture provides a foundation for a best-in class customer experience and business success for Nortel's partners. Building on the success of Advantage, the Velocity incentives reinforce these principles and will accelerate the adoption of converged solutions.

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.

Use of the terms "partner" and "partnership" does not imply a legal partnership between Nortel and any other party.

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