Nortel and Telefónica O2 Czech Republic Demonstrate Broad…..

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Nortel and Telefónica O2 Czech Republic Demonstrate Broadband Wireless Spectrum Potential

Europe's First CDMA2000 1x EV-DO Rev A Call at 450 MHz Radio Spectrum

PRAGUE, Czech Republic

Nortel(x) (NYSE/TSX: NT) and Telefónica O2 Czech Republic, the largest provider of wireless voice and data services in the Czech Republic, have teamed to show how operators can use broadband wireless spectrum more efficiently.

Today, the two companies successfully demonstrated Europe's first CDMA2000 1xEV-DO Rev A call in the Telefónica O2 Czech Republic network at 450 MHz radio spectrum. This broadband capability is expected to enable Telefónica O2 Czech Republic to deliver more IP wireless services such as mobile music and interactive 3D gaming, VoIP, and high-speed file transfers; and support real-time interactive access to services such as push-to-talk, mobile television and video telephony.

'We are glad that the 1xEV-DO Rev A deployment pilot has been successfully accomplished,' said Pavel Kolar, Chief Network Infrastructure Officer, Telefónica O2 Czech Republic. 'We have experienced significant improvement on the throughput and latency of Rev A data transfer. It clearly demonstrates that the latest CDMA2000 technology evolution, in combination with excellent radio propagation in the 450 MHz band, delivers improved customer benefits.'

'Nortel's eleven-year experience with CDMA is helping us develop leading-edge solutions which benefit wireless operators by increasing revenue potential and enhancing the subscriber experience,' said Wim Te Niet, president Central Region EMEA, Nortel. 'With Telefónica O2 Czech Republic we're showing how Nortel's unique blend of broadband access products, IP core experience, network services and ability to deliver simple network upgrades helps to get the best from the wireless spectrum.'

The call was enabled by a simple upgrade from 1xEV-DO Rev 0 to Rev A technology. Using the same 1.25 MHz channel, CDMA2000 1xEV-DO Rev A provides both forward and reverse links with more capacity and higher data rates, with up to 3.1 Mbps in the forward link and 1.8 Mbps in the reverse link. These faster data rates combined with Quality of Service (QoS) and low latency, enables the provision of 3.5G services such as wireless gaming, streaming audio and video, and high performance push-to-talk capabilities. In addition to the Nortel upgrade, the demonstration was achieved using an ADU-500A CDMA EV-DO Rev A wireless modem from AnyDATA.

Nortel CDMA 450 equipment creates networking efficiencies that help drive reduced capital and operating costs. The 1xEV-DO Rev A implementation only required one hardware addition - the Rev A channel card - on the Telefónica O2 Czech Republic network to enable the new service and maximize the operator's existing investment in 450 MHz spectrum and core network equipment.

Nortel has provided EV-DO equipment to 21 of the 37 commercial networks with leading operators worldwide including Verizon Wireless and Sprint in the United States, Bell Mobility and Telus in Canada. Nortel was the first to commercially offer EV-DO in South America with Embratel, Brazil; in Central America with Telefónica Guatemala; and is now the first to deliver EV-DO at 450 MHz in Eastern Europe with Telefónica O2 Czech Republic.

About Telefónica O2 Czech Republic

Telefónica O2 Czech Republic, a.s., is the first integrated operator in the Czech Republic formed on 1 July 2006 by the merger of the leading fixed line operator, CESKY TELECOM, a.s., and the strongest mobile operator, Eurotel Praha, spol. s r.o., into a single telecommunications organization. The organization now operates nearly eight million lines, both fixed and mobile, making it one of the world's leading providers of fully converged services. Telefónica O2 Czech Republic offers the most comprehensive portfolio of voice and data services in this country. Special attention is paid to exploiting growth potential, in particular the company's data and Internet business. Telefónica O2 Czech Republic operates the largest fixed and mobile network including a unique 3rd generation network, CDMA (for data) and UMTS, enabling the transport of voice, data and video.

Furthermore, Telefónica O2 Czech Republic offers the largest network of WiFi hotspots in the country. Telefónica O2 Czech Republic is part of the O2 Group within Telefónica SA and uses the O2 brand for all consumer-facing activities.

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', '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 approval of its proposed class action settlement; 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; 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, including completion of the sale of its UMTS access business to Alcatel-Lucent; 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 support 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 support facility; 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 the 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 Reports 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.

For further information: Sabine Werb, +49-69-66971906, [email protected]; Martin Zabka, Fax: (+420) 271 469 896, [email protected]/





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