Nortel to Capitalize on Growth in Video Bandwidth

Toronto, Canada (ots/PRNewswire) -

- Metro Ethernet Networks Builds on Nortel's Optical and Carrier
Data Leadership

Nortel(x) (NYSE: NT , TSX: NT) President and CEO Mike Zafirovski
today announced a new business focus on driving market share in
super-fast Ethernet networks essential to handling the coming growth
of bandwidth- hungry video applications.

Nortel's strategic initiative - Metro Ethernet Networks - will be
led by Philippe Morin as president. This initiative will offer
innovative Ethernet portfolios designed to deliver high quality,
reliability and security.

"Nortel's future depends on our continued leadership in innovation
and with our new Metro Ethernet Networks we're bringing our best
technologies together, backed by an initial incremental investment
in R&D," said Zafirovski. "In his previous position as general
manager, Optical, Philippe grew the business approximately 24
percent last year to US$1.2 billion. I have every confidence he will
build on that leadership and momentum through Metro Ethernet
Networks."

"With IPTV, IMS and other applications evolving quickly, service
providers will face huge bandwidth challenges across all networks -
wireless, wireline and cable. Metro Ethernet Networks is the first
step in getting Nortel in front of that curve to win in this
critical new space in the market," said Zafirovski.

Nortel's Metro Ethernet Networks business strategy is based on the
increasing reliance on Ethernet as the standard protocol for both LAN
and WAN communications to break the bandwidth bottleneck between
high-speed fibre- optic networks and metro networks serving
consumers and business. In addition, Nortel's Metro Ethernet
Networks will focus on wireless capabilities, using its Metro
Ethernet solution to ensure such applications as high-bandwidth
video provide real-time speed and quality to mobile devices.

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. Our next- generation technologies, for both service
providers and enterprises, span access and core networks, support
multimedia and business-critical applications, and help eliminate
today's barriers to efficiency, speed and performance by simplifying
networks and connecting people with information. 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 statements in this press release may contain words such as
" could", "expects", "may", "anticipates", "believes", "intends",
"estimates ", "plans", "envisions", "seeks" and other similar
language and are considered forward-looking statements or
information under applicable securities legislation. These
statements are based on Nortel's current expectations, estimates,
forecasts and projections about the operating environment, economies
and markets in which Nortel operates. These statements are subject
to important assumptions, risks and uncertainties, which are
difficult to predict and the actual outcome may be materially
different. Although Nortel believes expectations reflected in such
forward- looking statements are reasonable based upon certain
assumptions, they may prove to be inaccurate and consequently
Nortel's actual results or events could differ materially from its
expectations set out in this press release . Further, actual results
or events could differ materially from those contemplated in
forward-looking statements as a result of the following (i) risks
and uncertainties relating to Nortel's restatements and related
matters including: Nortel's most recent restatement and two previous
restatements of its financial statements and related events; the
negative impact on Nortel and NNL of their most recent restatement
and delay in filing their financial statements and related periodic
reports (including the anticipated delay in filing the Quarterly
Reports on Form 10-Q for the first quarter of 2006) causing them to
breach their public debt indentures and, if the delay extends beyond
June 15, 2006, their obligations under their credit facilities, with
the possibility that the holders of their public debt or NNL's
lenders would seek to accelerate the maturity of that debt, and
causing, if the delay extends beyond June 15, 2006, a breach of
NNL's support facility with EDC with the possibility that EDC would
refuse to issue additional support under the facility, terminate its
commitments under the facility or require NNL to cash collateralize
all existing support; legal judgments, fines, penalties or
settlements, or any substantial regulatory fines or other penalties
or sanctions, related to the ongoing regulatory and criminal
investigations of Nortel in the U.S. and Canada; any significant
pending civil litigation actions not encompassed by Nortel's
proposed class action settlement; any substantial cash payment
and/or significant dilution of Nortel's existing equity positions
resulting from the finalization and approval of its proposed class
action settlement, or if such proposed class action settlement is not
finalized, any larger settlements or awards of damages in respect of
such class actions; any unsuccessful remediation of Nortel's
material weaknesses in internal control over financial reporting
resulting in an inability to report Nortel's results of operations
and financial condition accurately and in a timely manner; the time
required to implement Nortel's remedial measures; Nortel's inability
to access, in its current form, its shelf registration filed with
the United States Securities and Exchange Commission (SEC), and
Nortel's below investment grade credit rating and any further
adverse effect on its credit rating due to Nortel's restatement of
its financial statements; any adverse affect on Nortel's business and
market price of its publicly traded securities arising from
continuing negative publicity related to Nortel's restatements;
Nortel's potential inability to attract or retain the personnel
necessary to achieve its business objectives; any breach by Nortel
of the continued listing requirements of the NYSE or TSX causing the
NYSE and/or the TSX to commence suspension or delisting procedures;
any default in Nortel's filing obligations extending beyond July 15,
2006 for the 2006 First Quarter Form 10-Qs, causing any Canadian
securities regulatory authority to impose an order to cease all
trading in Nortel's securities within the applicable jurisdiction or
to impose such an order sooner if Nortel fails to comply with the
alternate information guidelines of such regulatory authorities; (
ii) risks and uncertainties relating to Nortel's business including:
yearly and quarterly fluctuations of Nortel's operating results;
reduced demand and pricing pressures for its products due to global
economic conditions, significant competition, competitive pricing
practice, cautious capital spending by customers, increased industry
consolidation, rapidly changing technologies, evolving industry
standards, frequent new product introductions and short product life
cycles, and other trends and industry characteristics affecting the
telecommunications industry; any material and adverse affects on
Nortel's performance if its expectations regarding market demand for
particular products prove to be wrong or because of certain barriers
in its efforts to expand internationally; any reduction in Nortel's
operating results and any related volatility in the market price of
its publicly traded securities arising from any decline in its gross
margin, or fluctuations in foreign currency exchange rates; any
negative developments associated with Nortel's supply contract and
contract manufacturing agreements including as a result of using a
sole supplier for key optical networking solutions components, and
any defects or errors in Nortel's current or planned products; any
negative impact to Nortel of its failure to achieve its business
transformation objectives; additional valuation allowances for all
or a portion of its deferred tax assets; Nortel's failure to protect
its intellectual property rights, or any adverse judgments or
settlements arising out of disputes regarding intellectual property;
changes in regulation of the Internet and/or other aspects of the
industry; Nortel's failure to successfully operate or integrate its
strategic acquisitions, or failure to consummate or succeed with its
strategic alliances; any negative effect of Nortel's failure to
evolve adequately its financial and managerial control and reporting
systems and processes, manage and grow its business, or create an
effective risk management strategy; and (iii) risks and
uncertainties relating to Nortel's liquidity, financing arrangements
and capital including: the impact of Nortel's most recent
restatement and two previous restatements of its financial
statements; any acceleration under their public debt indentures and
credit facilities, which may result in Nortel and NNL being unable
to meet their respective payment obligations; any inability of
Nortel to manage cash flow fluctuations to fund working capital
requirements or achieve its business objectives in a timely manner or
obtain additional sources of funding; high levels of debt,
limitations on Nortel capitalizing on business opportunities because
of credit facility covenants, or on obtaining additional secured debt
pursuant to the provisions of indentures governing certain of
Nortel's public debt issues and the provisions of its credit
facilities; any increase of restricted cash requirements for Nortel
if it is unable to secure alternative support for obligations
arising from certain normal course business activities, or any
inability of Nortel's subsidiaries to provide it with sufficient
funding; any negative effect to Nortel of the need to make larger
defined benefit plans contributions in the future or exposure to
customer credit risks or inability of customers to fulfill payment
obligations under customer financing arrangements; any negative
impact on Nortel's ability to make future acquisitions, raise
capital, issue debt and retain employees arising from stock price
volatility and further declines in the market price of Nortel's
publicly traded securities , or any future share consolidation
resulting in a lower total market capitalization or adverse effect
on the liquidity of Nortel's common shares . For additional
information with respect to certain of these and other factors, see
the Company's Annual Report on Form 10-K/A and NNL's Annual Report
on Form 10-K and other securities filings 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.

(x) Nortel, the Nortel logo and the Globemark are trademarks of
Nortel Networks.

ots Originaltext: Nortel Networks
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Contact:
For further information: Patricia Vernon, +1-(905)-863-1035,
patricve@nortel.com; Jay Barta, +1-(972)-685-2381, jbarta@nortel.com