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March 24, 2003

Kapsch CarrierCom Selects Nortel Networks to Provide GSM-R for Slovak Railways

HANOVER, Germany – Kapsch CarrierCom has selected Nortel Networks* [NYSE/TSX: NT] to supply a GSM-R (Global System for Mobile Communications for Railways) communications network for Slovak Railways.

Nortel Networks will supply Kapsch CarrierCom with a complete network infrastructure solution – including GSM-R compliant radio base stations and switching equipment – to connect Slovak Railways to the railway communications networks of the Czech Republic, Austria and Hungary.

“Comprehensive transportation system solutions are based on a complex interplay of many different components,” said Thomas Schöpf, a member of the board of directors of Kapsch CarrierCom. “The selection of the right telecommunications solution as one of these components is a key success driver.”

“This sophisticated network transition will substantially contribute to the competitiveness of Slovakia and its industry in relation to other important economic areas in Europe,” Schöpf said. “It will be a showcase of the capability and effectiveness of Slovak Railways, so Kapsch CarrierCom as the main contractor has chosen a strong and reliable ally with long-term experience in this sector.”

“Nortel Networks continues to deliver pan-European radio systems to satisfy the mobile communications needs of European railway operators,” said Vivian Hudson, president and general manager, GSM/GSM-R, Nortel Networks. “Using state-of-the-art technology derived from our leadership in Wireless Data Networks for public service providers, Nortel Networks GSM-R technology has been developed to meet the business challenges of interoperability, improved operational performance, and value added services differentiation.”

GSM-R was introduced to overcome the inefficient use of aging analog systems with one comprehensive voice and data infrastructure to increase spectrum efficiency while optimising operations. GSM-R, the digital train radio technology, forms the basis for voice and data traffic and the use of ETCS (Electronic Train Control System) GSM-R was developed under the EU-funded MORANE (MObile Radio for Railways Networks in Europe) project in which Nortel Networks was heavily involved and whose aim is to create a uniform digital radio system throughout Europe.

GSM-R is a mature technology in commercial operation and deployment in numerous countries across Europe and is on its way to becoming an international standard. Nortel Networks is now supplying GSM-R in Germany, France (MORANE), the UK, Italy and Slovakia. In Germany, Nortel Networks has deployed more than 1,500 base stations with Deutsche Bahn in the largest GSM-R network in the world. Nortel Networks has also provided the GSM-R end-to-end system of the new ICE high-speed line in commercial operation between Frankfurt and Cologne, as well as the high-speed line between Roma and Naples in Italy.

Today, most railway telecommunications networks in Europe use different systems for various types of applications and users. These systems typically belong to an earlier generation of radio systems, using analogue technology and different frequency ranges with limited applications and performance. Due to the inefficient use of radio frequencies, high operations and maintenance costs, and limited interoperability between railway networks, the concept of GSM-R was introduced. Nortel Networks has been a key player in the GSM-R standards process since 1992, working with UIC (Union Internationale des Chemins de Fer) and ETSI (European Telecommunications Standards Institute). Nortel Networks supplied equipment for the MORANE project, and was also heavily involved in the EIRENE (European Integrated Radio Enhanced Network) project, which was originated by the EC (European Commission) with the aim of contributing to the interoperability of European railway networks.

Within the Kapsch Group, Kapsch CarrierCom AG is the system-innovator of communication-technology solutions for operators of fixed networks, mobile networks and data networks. The company’s competence covers optical transmission equipment, radio relay systems, and voice switching systems, GSM/GPRS/UMTS mobile networks and data equipment for ATM, frame relay and IP. Kapsch CarrierCom therefore covers the entire value added chain from consultation, design, development, installation and integration to the maintenance and operation of complete networks.

Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web 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 severity and duration of the industry adjustment; the sufficiency of our restructuring activities, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; fluctuations in operating results and general industry, economic and market conditions and growth rates; the ability to recruit and retain qualified employees; fluctuations in cash flow; the level of outstanding debt and our current debt ratings; the ability to meet the financial covenant in our credit facilities; the use of cash collateral to support our normal course business activities; the dependence on our subsidiaries for funding; the impact of our defined benefit plans and our deferred tax assets on our results of operations, cash flows and compliance with our financial covenant; the ability to make acquisitions and/or 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 competition; 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; the dependence on new product development; the uncertainties of the Internet; the impact of the credit risks of our customers and the impact of customer financing and commitments; stock market volatility; the impact of the New York Stock Exchange minimum listing requirements and the proposed consolidation of our common shares; the impact of acceleration or early settlement of our purchase contracts; the impact of 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; the ability to obtain timely, adequate and reasonably priced component parts from suppliers and internal manufacturing capacity; the future success of our strategic alliances; and the adverse resolution of litigation. 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. Unless otherwise required by applicable securities laws, 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 and the Globemark are trademarks of Nortel Networks.

Contact for Press and Analysts:

Claire Cranton
Nortel Networks
+ 44 1628 61 7178
cranton@nortel.com

Sabine Werb
Nortel Networks
+ 49 69 66 97 1906
werbs@nortel.com

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