Nortel Honored by Canada’s Telecom Hall of Fame for "Digital World" Effort

Special Recognition Award Given for Nortel’s Role in Pioneering Digital Communications

SEPTEMBER 13, 2006 - TORONTO -Nortel* [NYSE/TSX: NT] will receive a special recognition award from Canada’s Telecommunications Hall of Fame on October 16 for its role in pioneering digital communications. The award is based on Nortel’s development of the world’s first complete family of telecommunications systems based on digital technology. Nortel’s “Digital World” initiative, announced in March 1976, eventually became known as the project that launched the telecommunications industry into a new era and that laid the foundation for much of the innovation for years to come.

Canada’s Telecom Hall of Fame’s special recognition award is given annually to acknowledge achievements of special significance to the success and legacy of Canadian telecommunications.

“Digital World helped launch the digital revolution, forever changing the nature of telecommunications and catapulting Nortel - relatively unknown outside of Canada at that time - to among the top players of the global telecommunications industry,” said John Roese, chief technology officer, Nortel. “We are honored to receive this recognition, which is a credit to past Nortel business and technology leaders and to Bell-Northern Research (BNR), our affiliated R&D company that worked seamlessly with us at the time to deliver this remarkable achievement.”

Digital World was Nortel’s (then called Northern Telecom) daring declaration - made public by a three-page advertisement that appeared in major trade publications in 1976 - that digital technology was the key to the future. Nortel was the first to announce - and to deliver, one year ahead of schedule - a complete line of fully digital telecommunications products. The most well-known of that Digital World product family, the DMS-100, a fully digital central office switch serving as many as 100,000 lines, was a key contributor to Nortel’s revenue for close to 15 years. By 1979, Nortel had passed the telecom giants of the world to bring on stream the world’s first family of digital switching systems.

According to Lorne Abugov, founder and director, Canada’s Telecommunications Hall of Fame, the Digital World initiative represented the first major technological achievement in the modern history of Canadian telecommunications. “The intensive effort and teamwork of Northern Telecom and BNR to bring a complete family of digital switching products to market gave our nation a leadership position in digital communications,” said Abugov. “The pioneering vision of the Digital World initiative enabled Nortel to leapfrog a competitive field still largely focused on analog technology and take the lead in digital switching for close to two decades.”

Today, Nortel’s digital equipment is at the heart of every one of the top 25 service provider networks in the world. For 111 years, Nortel has been a leader the telecommunications industry in Canada, playing a key role in developing technologies that have helped changed the nature of modern communications around the world. Nortel is Canada’s leading innovator, accounting for more than 15% of all private sector R&D and 85% of telecom R&D in the nation, based upon data from Statistics Canada and Nortel. Nortel participates in 99 global standards organizations, forums and consortia worldwide - spanning IT and telecom - and holds leadership positions in approximately 40 percent of them.

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.

About Canada’s Telecommunications Hall of Fame

Established May 30, 2005, Canada’s Telecommunications Hall of Fame is a not for profit organization whose mission is to honour and promote the rich 160-year legacy of the telecommunications industry in Canada. The organization’s focus is on significant contributions to Canadian telecommunications by the industry’s inventors and innovators, icons of business, servants of the public and advocates and academics. The Hall of Fame fulfills its mission through two principle programs: The Telecommunications Laureate Program and the Education and Outreach Program. Take a tour of Canada’s Telecommunications Hall of Fame at: www.telecomhall.ca.**

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 finalization and approval of its proposed class action settlement, or if such proposed class action settlement is not finalized, any larger settlements or awards of damages in respect of such class actions; 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; 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 credit 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 credit facilities; 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 any future 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 Form10-K/A, Quarterly Report 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.

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

**This is a 3rd party link as described in our Web linking practices.

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