Nortel Advances Business Strategy With Proposed Sale of UMTS Access Business to Alcatel

Toronto (ots/PRNewswire) -

- Refines Focus on Next-Generation Mobility

Nortel(x) (NYSE: NT; TSX: NT) today announced that it has signed a
non- binding Memorandum of Understanding for the sale of its UMTS
access business to Alcatel for US $320 million, a move that will
enable Nortel to simplify its business and strategically focus its
investments for leadership in key markets while ensuring its
customers' UMTS access requirements will continue to be met.

As part of its business strategy, Nortel is executing on plans to
increase investment in key areas, partner in others, and divest where
there is no path for it to lead or realize attractive returns.

"Nortel is sharpening its focus on the markets in which we intend
to lead. Our UMTS access business lacks the scale and momentum
needed to become profitable," said Mike Zafirovski, president and
chief executive officer, Nortel.

There are three core elements of Nortel's strategic focus - next-
generation mobility, enterprise transformation, and services and
applications. Much like its partnership with Microsoft announced in
July, this is another key step in changing the trajectory of
Nortel's business.

"With next-generation mobility, we see an opportunity to change
the game by applying our networking expertise and technology
innovation to significantly alter the economic paradigm of mobility
solutions in the future," said Zafirovski.

"We are absolutely committed to mobility and plan to lead the 4G
evolution and play a key role in the mass market adoption of mobile
video and multimedia services." said Richard Lowe, president,
Mobility and Converged Core Networks, Nortel. "With a strong
position in GSM and CDMA, an established service provider customer
base, and technology leadership in key areas like OFDM-MIMO, we have
a solid foundation for success going forward."

As part of its ongoing mobility business, Nortel will continue to
develop and support solutions for the evolution of GSM access and
core, GSM- R, GPRS and EDGE technologies as well as CDMA access and
core and UMTS core.

The proposed sale includes Nortel's UMTS access product portfolio
made up of the Radio Network Controller and Node B products and OAM
solutions, related services and associated assets. It is anticipated
that the significant majority of employees of Nortel's UMTS access
business will transfer to Alcatel. Completion of the transaction is
subject to, among other things, the negotiation and execution of a
definitive agreement between Nortel and Alcatel, completion of
consultations with work councils and other employee representatives,
and customary closing conditions including regulatory approvals. The
parties are targeting completion of the transaction in the fourth
quarter of 2006.

"This deal is good for our UMTS access customers. They will
benefit from Alcatel's resulting scale in this market. We will work
closely with Alcatel to make the hand-over as smooth as possible for
our customers, with whom we plan to have strong, on-going
relationships," said Lowe.

"The expertise of Nortel's UMTS team is well-known, and I am
confident that our combined forces will pave the way for further
success in the wireless market," said Marc Rouanne, president of
Alcatel's mobile communications activities. "We are committed to
support and evolve our extended customer base."

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.

Nortel will host a teleconference/audio webcast to discuss this
announcement.

TIME: 9:00 am (ET), Friday, September 1, 2006

To participate, please call the following at least 15 minutes
prior to the start of the event.

Teleconference:
North America: 1-888-211-4395
International: 1-416-620-2417
Webcast: http://www.nortel.com/mediaevent
Replay:
(Available one hour after the conference call)
North America: 1-800-383-0935
International: 1-402-530-5545
Passcode: 21302444 followed by the number sign
Webcast: http://www.nortel.com/mediaevent

Certain statements in this press release may contain words such as
"could", "expects", "may", "anticipates", "believes", "intends",
"estimates ", "targets", "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. 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; 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 restatements 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; (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;
the sufficiency of recently announced restructuring actions,
including the potential for higher actual costs to be incurred in
connection with these restructuring actions compared to the
estimated costs of such actions and the ability to achieve the
targeted cost savings and reductions of Nortel's unfunded pension
liability deficit; 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; a ny 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 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 Nortel's Annual Report on Form 10-K/A, Quarterly Report
on Form 10-Q 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
Im Internet recherchierbar: http://www.presseportal.de

Contact:
For further information: Ben Roome, Nortel, +44-1628-43-3113,
benroome@nortel.com; Jay Barta, Nortel, +1-(972)-685-2381,
jbarta@nortel.com; Investors, +1-(905)-863-6049, +1-(888)-901-7286,
investor@nortel.com