Nortel Reaches Settlement Agreement With OSC Staff

TORONTO – Nortel* [NYSE/TSX: NT] announced that the Ontario Securities Commission (OSC or the Commission) has issued a Notice of Hearing to consider a Settlement Agreement that has been reached by the Staff of the OSC with Nortel and its principal operating subsidiary Nortel Networks Limited (NNL). The Settlement Agreement relates to certain allegations made by the Staff regarding certain accounting practices which a previously announced Nortel independent inquiry found to have occurred during the 2000 fiscal year, the last two fiscal quarters of 2002 and the first two fiscal quarters of 2003, which had led to certain restatements of Nortel’s and NNL’s financial results.

The hearing will be held on May 22, 2007 to consider whether it is in the public interest for the Commission to make an order, pursuant to the Ontario Securities Act, approving the Settlement Agreement. As is customary in such cases, the terms of the Settlement Agreement are confidential and will be made public only if and when approved by the Commission.