Nortel Announces GENBAND as Successful Acquirer of its Carrier VoIP and Application Solutions Business

* Working toward a Q2 2010 closing of the asset sale agreements with GENBAND for a purchase price of US$282 million subject to balance sheet and other adjustments currently estimated at US$100 million for a net purchase price of approximately US$182 million
* U.S. and Canadian court approvals of sale will be sought at a joint hearing on March 3, 2010

TORONTO - Nortel* Networks Corporation [OTC: NRTLQ] today announced that, it, its principal operating subsidiary Nortel Networks Limited (NNL), and certain of its other subsidiaries, including Nortel Networks Inc. and Nortel Networks UK Limited (in administration), will not proceed to auction and will work towards closing the asset sale agreements with GENBAND, Inc. (GENBAND) which were previously announced on December 23, 2009. The agreements provide for the sale of substantially all of the global assets of Nortel’s Carrier VoIP and Application Solutions (CVAS) business for a purchase price of US$282 million, subject to balance sheet and other adjustments currently estimated at approximately US$100 million for a net purchase price of approximately US$182 million.

Under the terms of the agreements, GENBAND’s purchase will include substantially all product platforms, all patents predominantly used, and other IP exclusively used in Nortel’s CVAS business, including softswitching, gateways, SIP applications, and TDM products and services. The agreement will also provide for the transition of substantially all of Nortel’s CVAS customer contracts to GENBAND.

GENBAND has teamed with One Equity Partners (OEP) and other existing shareholders to secure the Nortel CVAS assets.

The sale is subject to court approvals in the U.S. and Canada, which Nortel will seek at a joint hearing on March 3, 2010, and in Israel. Nortel will work diligently with GENBAND to close the sale in the second quarter of 2010, subject to the timing of regulatory approvals.

A significant majority of CVAS employees will have the opportunity to continue employment with GENBAND. This includes those employees assigned to the CVAS business in certain EMEA jurisdictions who will transfer automatically to GENBAND by operation of law. The sale is also subject to certain regulatory approvals, information and consultation with employee representatives and/or employees in certain EMEA jurisdictions, other customary closing conditions and certain post-closing purchase price adjustments. U.S. and Canadian antitrust clearance for the sale has been obtained.

“Uniting our two businesses will create one of the industry’s strongest Carrier VoIP players, in terms of market share, customer base and portfolio,” said Samih Elhage, president, CVAS, Nortel. “Joining forces with GENBAND will allow us to continue to provide a highly reliable solution and service offering to service providers and enterprises across the globe. I am also pleased that a significant majority of Nortel’s employees, who have been an integral part of our long-standing #1 position in the Carrier VoIP market, will have the opportunity to continue their innovative work with GENBAND.”

“This acquisition will combine softswitch and application leadership with media, session and security gateway leadership - creating the industry’s most comprehensive Carrier VoIP portfolio,” said Charles D. Vogt, president and CEO, GENBAND. “This move will put GENBAND in a unique position to cost-effectively transform today’s legacy switching infrastructure for customers around the world. We look forward to integrating Nortel’s CVAS products and welcoming their talented CVAS employees to GENBAND, as we continue to support the industry’s migration from TDM to IP, IP to IP and fixed to fixed-mobile convergence, all of which are market accelerators over the next five years.”

“Nortel and GENBAND will accelerate the integration planning and execution work to make this transition as smooth as possible for our customers. In addition, throughout the completion of this transaction, we will continue to deliver on our customer commitments and provide the highest levels of customer service that Nortel CVAS customers have come to expect from our team.” Elhage added.

Nortel’s CVAS business is the recognized leader in the Carrier VoIP space, having shipped more than 121 million Carrier VoIP and Multimedia ports, including over 10 million SIP lines to leading carriers globally. Nortel has consistently been ranked as the #1 Global Carrier VoIP and Softswitch leader since 2002. Nortel’s CVAS business has customer deployments in all continents with leading carriers and provides VoIP solutions to 80 percent of IDC’s worldwide listing of top 20 carriers (by revenue).

As previously announced, Nortel does not expect that the Company’s common shareholders or the NNL preferred shareholders will receive any value from the creditor protection proceedings and expects that the proceedings will result in the cancellation of these equity interests.

About Nortel

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”, “should”, “will”, “anticipates”, “believes”, “intends”, “estimates”, “targets”, “plans”, “envisions”, “seeks” and other similar language and are considered forward-looking statements or information under applicable securities laws. 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 that are difficult to predict, and the actual outcome may be materially different. Nortel’s assumptions, although considered reasonable by Nortel at the date of this press release, may prove to be inaccurate and consequently Nortel’s actual results could differ materially from the expectations set out herein.

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 the Creditor Protection Proceedings including: (a) risks associated with Nortel’s ability to: stabilize the business and maximize the value of Nortel’s businesses; obtain required approvals and successfully consummate pending and future divestitures; ability to satisfy transition services agreement obligations in connection with divestiture of operations; successfully conclude ongoing discussions for the sale of Nortel’s other assets or businesses; develop, obtain required approvals for, and implement a court approved plan; resolve ongoing issues with creditors and other third parties whose interests may differ from Nortel’s; generate cash from operations and maintain adequate cash on hand in each of its jurisdictions to fund operations within the jurisdiction during the Creditor Protection Proceedings; access the EDC Facility given the current discretionary nature of the facility, or arrange for alternative funding; if necessary, arrange for sufficient debtor-in-possession or other financing; continue to have cash management arrangements and obtain any further required approvals from the Canadian Monitor, the U.K. Administrators, the French Administrator, the Israeli Administrators, the U.S. Creditors’ Committee, or other third parties; raise capital to satisfy claims, including Nortel’s ability to sell assets to satisfy claims against Nortel; maintain R&D investments; realize full or fair value for any assets or business that are divested; utilize net operating loss carryforwards and certain other tax attributes in the future; avoid the substantive consolidation of NNI’s assets and liabilities with those of one or more other U.S. Debtors; attract and retain customers or avoid reduction in, or delay or suspension of, customer orders as a result of the uncertainty caused by the Creditor Protection Proceedings; maintain market share, as competitors move to capitalize on customer concerns; operate Nortel’s business effectively under the new organizational structure, and in consultation with the Canadian Monitor, and the U.S. Creditors’ Committee and work effectively with the U.K. Administrators, French Administrator and Israeli Administrators in their respective administration of the EMEA businesses subject to the Creditor Protection Proceedings; continue as a going concern; actively and adequately communicate on and respond to events, media and rumors associated with the Creditor Protection Proceedings that could adversely affect Nortel’s relationships with customers, suppliers, partners and employees; retain and incentivize key employees and attract new employees as may be needed; retain, or if necessary, replace major suppliers on acceptable terms and avoid disruptions in Nortel’s supply chain; maintain current relationships with reseller partners, joint venture partners and strategic alliance partners; obtain court orders or approvals with respect to motions filed from time to time; resolve claims made against Nortel in connection with the Creditor Protection Proceedings for amounts not exceeding Nortel’s recorded liabilities subject to compromise; prevent third parties from obtaining court orders or approvals that are contrary to Nortel’s interests; reject, repudiate or terminate contracts; and (b) risks and uncertainties associated with: limitations on actions against any Debtor during the Creditor Protection Proceedings; the values, if any, that will be prescribed pursuant to any court approved plan to outstanding Nortel securities and, in particular, that Nortel does not expect that any value will be prescribed to the NNC common shares or the NNL preferred shares in any such plan; the delisting of NNC common shares from the NYSE; and the delisting of NNC common shares and NNL preferred shares from the TSX; and (ii) risks and uncertainties relating to Nortel’s business including: the sustained economic downturn and volatile market conditions and resulting negative impact on Nortel’s business, results of operations and financial position and its ability to accurately forecast its results and cash position; cautious capital spending by customers as a result of factors including current economic uncertainties; fluctuations in foreign currency exchange rates; any requirement to make larger contributions to defined benefit plans in the future; a high level of debt, arduous or restrictive terms and conditions related to accessing certain sources of funding; the sufficiency of workforce and cost reduction initiatives; any negative developments associated with Nortel’s suppliers and contract manufacturers including Nortel’s reliance on certain suppliers for key optical networking solutions components and on one supplier for most of its manufacturing and design functions; potential penalties, damages or cancelled customer contracts from failure to meet contractual obligations including delivery and installation deadlines and any defects or errors in Nortel’s current or planned products; significant competition, competitive pricing practices, 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; any material, adverse affects on Nortel’s performance if its expectations regarding market demand for particular products prove to be wrong; potential higher operational and financial risks associated with Nortel’s international operations; a failure to protect Nortel’s intellectual property rights; any adverse legal judgments, fines, penalties or settlements related to any significant pending or future litigation actions; failure to maintain integrity of Nortel’s information systems; changes in regulation of the Internet or other regulatory changes; and Nortel’s potential inability to maintain an effective risk management strategy.

For additional information with respect to certain of these and other factors, see Nortel’s Annual Report on Form 10-K, 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.

For the Companies listed below, The Institute of Chartered Accountants in England and Wales authorises A R Bloom, S Harris and C Hill to act as Insolvency Practitioners under section 390(2)(a) of the Insolvency Act 1986 and the Association of Chartered Certified Accountants authorises A M Hudson to act as an Insolvency Practitioner under section 390(2)(a) of the Insolvency Act 1986.

The affairs, business and property of the Companies are being managed by the Joint Administrators, A R Bloom, S Harris, AM Hudson and C Hill who act as agents of the Companies only and without personal liability.

The affairs, business and property of Nortel Networks (Ireland) Limited are being managed by the Joint Administrators, A R Bloom and D Hughes, who act as agents of Nortel Networks (Ireland) Limited only and without personal liability.

The Companies are: Nortel Networks UK Limited; Nortel Networks SA; Nortel GmbH; Nortel Networks France SAS; Nortel Networks NV; Nortel Networks SpA; Nortel Networks BV; Nortel Networks Polska SP Zoo; Nortel Networks Hispania SA; Nortel Networks (Austria) GmbH; Nortel Networks sro; Nortel Networks Engineering Service Kft; Nortel Networks Portugal SA; Nortel Networks Slovensko sro; Nortel Networks Oy; Nortel Networks Romania SRL; Nortel Networks AB; Nortel Networks International Finance & Holding BV

*Nortel, the Nortel logo and the Globemark are trademarks of Nortel Networks.