Nortel

Nortel

February 28, 2005 17:50 ET

Nortel Provides Status Update


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: NORTEL

NYSE, TSX SYMBOL: NT

FEBRUARY 28, 2005 - 17:50 ET

Nortel Provides Status Update

TORONTO--(CCNMatthews - Feb 28, 2005) -

Nortel Networks Corporation (NYSE:NT)(TSX:NT) and its principal
operating subsidiary, Nortel Networks Limited ("NNL"), today provided a
status update pursuant to the alternative information guidelines of the
Ontario Securities Commission. These guidelines contemplate that the
Company and NNL will normally provide bi-weekly updates on their affairs
until such time as they are current with their filing obligations under
Canadian securities laws.

Filing of Financial Statements for Third Quarter 2004 and Year 2004

The Company expects that it and NNL will file their unaudited financial
statements for the third quarter of 2004, and related Quarterly Reports
on Form 10-Q (the "2004 Third Quarter Reports") and corresponding
Canadian filings, by the end of March 2005, and their audited financial
statements for the year 2004, and related Annual Reports on Form 10-K
(the "2004 Annual Reports") and corresponding Canadian filings, by the
end of April 2005. The Company and NNL will therefore each be filing
with the United States Securities and Exchange Commission (the "SEC") a
Form 12b-25 Notification of Late Filing relating to the delay in filing
their 2004 Annual Reports.

The Company's expectation as to timing of filing their financial
statements is subject to change due to limitations including: previously
announced material weaknesses in the Company's internal control over
financial reporting and the review or audit of the Nortel financial
statements by the Company's external auditors. In addition, the Company
continues to work with its external auditors on the internal control
reports required for the first time in connection with the 2004 Annual
Reports under s.404 of the Sarbanes-Oxley Act of 2002.

Also, the Company announced that it ended 2004 with approximately US$3.7
billion in cash.

Annual Shareholders' Meeting

As previously announced, the Company was granted an order by the Ontario
Superior Court of Justice extending the time for calling the Company's
2004 Annual Shareholders' Meeting (the "Meeting") to a date no later
than May 31, 2005 or such later date as the Court may further permit.
This extension was obtained, after discussions with the Staff of the
SEC, to permit compliance with a specific SEC rule which would require,
in these circumstances, that the Company provide to shareholders its
2004 audited financial statements either prior to or concurrently with
the mailing of the proxy materials for the Meeting. As this would not be
possible if the Meeting were to be held by May 31, 2005 in light of the
Company's current expectation as to the timing for filing its 2004
audited financial statements, the Company intends to seek a Court order
extending the time for holding the Meeting to a date no later than June
30, 2005. If the order is granted, the Company intends to hold a
combined Annual Shareholders' Meeting for fiscal years 2003 and 2004 by
such date.

Debt Securities

As a result of the delay in filing the Company's and NNL's 2004 Third
Quarter Reports and the anticipated delay in filing their 2004 Annual
Reports, the Company and NNL are not in compliance with their
obligations to deliver their SEC filings to the trustees under their
public debt indentures. While a notice of default could have been given
at any time after March 30, 2004 by holders of at least 25 percent of
the outstanding principal amount of any relevant series of debt
securities, neither the Company nor NNL has received any such notice as
of February 25, 2005.

EDC Support Facility

As previously announced, the current waiver from Export Development
Canada ("EDC") of certain defaults related to the delayed filings and
related breaches under the EDC performance-related support facility (the
"EDC Support Facility") will expire on March 15, 2005. As the Company
and NNL currently expect to file the 2004 Third Quarter Reports by the
end of March 2005, EDC will have the right, on March 15, 2005 (absent a
further waiver in relation to the delayed filings and related breaches),
to terminate the EDC Support Facility, exercise certain rights against
collateral or require NNL to cash collateralize all existing support. In
addition, EDC will also have this right on March 30, 2005 (absent a
further waiver) as the Company and NNL do not expect to deliver their
2004 Annual Reports by such date. While NNL intends to seek a new waiver
from EDC in connection with the delay in filing the 2004 Third Quarter
Reports and 2004 Annual Reports, there can be no assurance that NNL will
receive a new waiver or as to the terms of any such waiver. For other
information on the EDC Support Facility and related breaches, see the
Company's press release "Nortel Announces New Waiver from Export
Development Canada" dated February 15, 2005.

The Company and NNL reported that there have been no material
developments in the matters reported in their status updates of June 2,
2004 through February 1, 2005; and the Company's press release "Nortel
Announces New Waiver from Export Development Canada" dated February 15,
2005, with the exception of the matters described above.

The Company's and NNL's next bi-weekly status update is expected to be
released during the week of March 14, 2005.

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; 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 controls over
financial reporting; the impact of Nortel's and NNL's failure to timely
file their financial statements and related periodic reports, including
breach of its support facility and public debt obligations and 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 our public filings; the
potential delisting or suspension of Nortel's and NNL's publicly traded
securities; 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,
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; 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 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 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 or early settlement, which is
currently not available, of Nortel's forward purchase contracts; 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.

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