TORONTO -- Nortel Networks* [NYSE: NT/TSE: NTL] announced today that it has successfully completed its acquisition of Cambrian Systems Corporation, based in Kanata, Ontario, for up to US$300 million in cash, US$60 million of which is contingent upon Cambrian Systems achieving certain business objectives in 1999. With the acquisition of Cambrian Systems' leading edge optical technology, Nortel Networks will speed the flow of traffic between metropolitan areas and the Internet backbone networks.

When Nortel Networks announced the agreement to acquire Cambrian Systems less then a week ago, many industry analysts commented positively on the move. "The acquisition of Cambrian Systems allows Nortel Networks to quickly address the metro market with a ring-based solution and ample capacity. Cambrian Systems has been considered a player with quality technology that was simply out ahead of the marketplace by a year. 1999 should be the year in which wide-scale metro DWDM deployments in North America, Western Europe and Japan occur. Thus, the time is right to bring products to market to address this expanding niche," said Scott Clavenna, principal analyst with Pioneer Consulting LLC. Robert Rosenberg, president of Insight Research Corporation said: "Less than three months after the Bay Networks acquisition, Cambrian Systems is another sound move. It will put Nortel Networks in a position to help its customers to move into the era of wideband local access service."

Approximately 170 Cambrian Systems' employees will be joined by 40 Nortel Networks Optical Networks designers. Cambrian Systems will continue to be based in Kanata, Ontario.

A significant portion of the acquisition price is expected to relate to in-process research and development. Nortel Networks will charge this amount to its earnings using an accelerated depreciation method over a period of less than twelve months. Excluding the impact of these non-cash charges on earnings, the acquisition is not expected to have a material impact on Nortel Networks' 1999 consolidated results of operations.

Nortel Networks works with customers worldwide to design, build, and deliver telephony and IP-optimized networks. Customers include public and private enterprises and institutions; Internet service providers; local, long-distance, cellular and PCS communications companies, cable television carriers, and utilities.

Nortel Networks' common shares are listed on the New York, Toronto, Montreal, Vancouver, and London stock exchanges. Nortel Networks had 1997 revenues of US$15.5 billion and Bay Networks, a wholly owned subsidiary of Nortel Networks, had revenues of US$2.4 billion during its most recent fiscal year. The combined company's workforce totals approximately 80,000 employees worldwide.

*Nortel Network, the Nortel Globemark and How the world shares ideas are trademarks of Northern Telecom

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