Nortel

Nortel

March 29, 2005 09:00 ET

U.S. Department of Defense Secures Voice Network Using Nortel Solution; Reduces Network Costs, Prepares for Circuit-to-Packet Migration


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: NORTEL

NYSE, TSX SYMBOL: NT

MARCH 29, 2005 - 09:00 ET

U.S. Department of Defense Secures Voice Network Using
Nortel Solution; Reduces Network Costs, Prepares for
Circuit-to-Packet Migration

WASHINGTON--(CCNMatthews - Mar 29, 2005) -

The United States Department of Defense (DoD) has chosen a Nortel
(NYSE:NT)(TSX:NT) solution to enhance its communications network,
support introduction of new applications, and improve control and
responsiveness in times of crisis -- all at reduced operational cost to
the government and taxpayers.

Nortel and DoD's Defense Information Systems Agency (DISA) -- with help
from systems integrators General Dynamics and CSC -- have designed a
network solution that will leverage existing communications equipment.
By upgrading hardware and adding new software, the entire DoD managed
voice network will be transformed into a private network under complete
DoD control.

This solution also puts DISA in a position to easily move from circuit
to packet applications on its own timetable, enabling cost reductions
and addition of new applications.

DISA spent several years creating an implementation plan to provide
increased security and to remedy some of the shortcomings of the current
Defense Switched Network (DSN).

"Today more than ever, the networking technology decisions made by the
Department of Defense will help shape this country's ability to serve
its citizens' needs, respond to threats, and analyze and use information
to protect citizens, property and infrastructure," said Chuck Saffell,
president, Federal Solutions, Nortel. "Nortel worked closely with DoD to
custom-design a solution that would support mission-critical
communications while reducing operational costs and increasing the
efficient use of the existing infrastructure."

"The DSN is a large, sophisticated global network that is well designed
and operated, but it also has relied on a managed service from private
sector telecommunications service providers for a portion of its
infrastructure," Saffell said. "That means that the ability of the DSN
to respond to any given crisis could be restricted because it is not
under direct governmental control."

The new hardware and software will create a multifunction switch for the
Department of Defense designed to cost-effectively provide full tandem
and end office capability. It will support a full range of
military-specific requirements including Multi-level Precedence and
Preemption (MLPP) service, which ensures that calls are put through in
order of priority in times of crisis.

In addition to enhancing security, the network solution will also enable
DISA to reduce operational costs by making more efficient use of U.S.
Air Force-owned resources. This has been achieved through a
collaborative effort between DISA and the U.S. Air Force Communications
Agency (AFCA).

After rigorous testing, the solution successfully completed Joint
Interoperability Test Command (JITC) certification, which ensures that
products are secure, operate optimally in a multi-vendor environment,
deliver exacting levels of performance under duress, and offer other
unique features and functionality required for national security.

The Department of Defense relies on Nortel solutions in all 50 states
and more than two dozen countries across the globe.

Nortel Federal Solutions is an organization dedicated to providing
robust networking solutions to defense, civil and intelligence agencies.
Supported by a world-class R&D organization, Nortel Federal Solutions is
focused on delivering converged solutions that provide the highest
levels of reliability, security and quality of service.

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 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 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
Networks.

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