Nortel Launches Supply Chain Center in Shanghai to Enhance Customer Value Enhanced Management of Growing

March 01, 2005

Nortel Launches Supply Chain Center in Shanghai to Enhance Customer Value; Enhanced Management of Growing Supply Base in Asia to Benefit Customers Worldwide

SHANGHAI, China --(Business Wire)-- March 1, 2005 -- As part of an ongoing supply chain evolution intended to reduce cost and maximize quality, Nortel (NYSE:NT)(TSE:NT) has launched a supply chain center in Shanghai. The Shanghai Supply Chain Center is the first in a series Nortel plans to deploy around the world and a major step in Nortel's strategy to create the industry's leading supply chain. Similar launches are being planned in India, North America, Eastern Europe and Mexico throughout 2005.

Nortel's Supply Chain Centers work closely with a wide range of global and regional suppliers by providing the best expertise available to ensure that all materials and processes meet Nortel's stringent quality standards and maximize cost effectiveness for manufacturing, network solutions and services. The Shanghai Supply Chain Center will be focused on managing these objectives with Nortel's fast-growing base of suppliers in Asia.

"This is another important step forward in Nortel's continued focus on optimizing global supply chain resources and investments to strengthen its compebreastive advantage while enhancing value for customers around the world," said Sue Spradley, president, Global Operations, Nortel. "With establishment of the Shanghai Supply Chain Center, we are applying 'best-in-clbutt' manufacturing capabilities in the region with close supplier collaboration to ignite and power global commerce."

The Shanghai Supply Chain Center is also expected to provide strong support for Nortel's growing research and development presence in China, which is intended to enhance value for customers in the region as well as those in other parts of the world.

"The Asian and Greater China Regions have emerged as a major supply base with 'best-in-clbutt' manufacturing technologies," said Robert Mao, president and chief executive officer, Greater China, Nortel. "Launch of the Shanghai Supply Chain Center not only enables us to work more efficiently with our suppliers in the region and identify new sources of supply, but also to create closer synergy with our R&D initiatives in China and to elevate our customer responsiveness to a new level."

Over the past six years, Nortel has divested most of its manufacturing activities to electronic manufacturing services suppliers. This strategy has positioned Nortel to concentrate on its core competencies and address changing market needs with cost-effective solutions of premium quality.

The Shanghai Supply Chain Center is an expansion of the existing wholly-owned Nortel Networks Telecommunications Equipment (Shanghai) Company Limited.

Nortel has established a significant presence in China, including three manufacturing and service joint ventures and two world-clbutt research and development centers in Beijing and Guangzhou in addition to the Shanghai operation.

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 encompbutting 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 buttets on results of operations and Nortel's cash flow; the adverse resolution of clbutt 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 compebreastion; 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 Networks.