PARIS, France - Nortel Networks* [NYSE/TSE: NT] and Egery, a joint venture of Vivendi and PSA Peugeot Citroen, have signed an agreement to jointly develop a Wireless Internet in-vehicle solution intended to demonstrate on-going innovation in high-speed multimedia applications and services for motorists.

The initial phase of this joint development - a demonstration system in a connected car - was unveiled today at the In-Car Tech trade show in Paris, France at the Egery booth.

Nortel Networks and Egery intend to develop a pilot system of Wireless Internet applications for motorists. These applications are expected to operate on both 2.5G GSM networks, which use GPRS (General Packet Radio Service) and 3G UMTS (Universal Mobile Telecommunications System) networks. Demonstration and deployment of this pilot system is anticipated during the first half of 2001.

The pilot system is aimed at providing European motorists with innovative, personalized, in-car services, otherwise known as telematics. The global telematics services market is expected to exceed US$15 billion annually by 2005 according to The Strategis Group.

These services will include m-commerce, location based services, safety and security, mobility and route guidance (dynamic navigation and traffic information), in-car entertainment (m-shopping, games, interactive radio, music and video on-demand).

"We see tremendous potential for in-vehicle applications with the introduction of high-speed GPRS and UMTS networks," said Doug Lowther, vice president, Wireless Internet Strategic Marketing, Nortel Networks. "Nortel Networks is building an end-to-end Wireless IP solution, which will enable operators to deliver personalized IP services to their subscribers using virtually any combination of multimedia content and access devices."

"The in-vehicle environment is an ideal place for an optimized usage of high-speed mobile Internet content and services for passengers and drivers alike," said Jean-Marc Monguillet, chief executive officer, Egery. "The power of GPRS and UMTS networks will make possible a whole new range of services for motorists, bringing contents such as music in the car and also allowing secured remote access to the car from the Internet, while complying with driving safety regulations."

Under the agreement announced today, Nortel Networks will provide GPRS and UMTS network expertise; Nortel Networks e-mobility* Internet Base Transceiver Station for wide-area radio access; Nortel Networks Passport* multiservice switch for media gateway functionality; Nortel Networks Shasta* 5000 Broadband Service Node for bandwidth management and advanced service delivery; Nortel Networks Contivity* extranet switch for secure VPN connections to corporate intranets; Nortel Networks Alteon* Web switch for advanced content networking; and Nortel Networks Preside* solutions for end-to-end network and service management.

Egery will contribute through its expertise in the automotive industry, access to selected content, graphical user interfaces, voice recognition and processing applications, and radio and video streaming applications. Egery, a joint venture company created in September 2000 by PSA Peugeot Citroën and Vivendi, is the first multi-access Internet company entirely dedicated to the European motorist. Visit us at www.egery.com.

Nortel Networks is a global Internet and communications leader with capabilities spanning Optical, Wireless, Local Internet and eBusiness. The Company had 1999 U.S. GAAP revenues of US$21.3 billion and serves carrier, service provider and enterprise customers globally. Today, Nortel Networks is creating a high-performance Internet that is more reliable and faster than ever before. It is redefining the economics and quality of networking and the Internet, promising a new era of collaboration, communications and commerce. Visit us at www.nortelnetworks.com.

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 impact of price and product competition; the dependence on new product development; the impact of rapid technological and market change; the ability of Nortel Networks to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; general industry and market conditions and growth rates; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of consolidations in the telecommunications industry, the uncertainties of the Internet; stock market volatility; the ability of Nortel Networks to recruit and retain qualified employees; and the impact of increased provision of customer financing by Nortel Networks. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. Nortel Networks 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 Networks, the Nortel Networks logo, the Globemark, e-mobility, Passport, Shasta, Contivity, Alteon and Preside are trademarks of Nortel Networks.