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Nortel PEC Solutions Wins US$21Million in Contract Modifications with US Postal Service


Helps USPS Better Serve Businesses, Citizens Via Automated Tools

DECEMBER 05, 2005, WASHINGTON - Nortel* PEC* Solutions* has earned contract modifications with the U.S Postal Service (USPS) totaling US$21 million for another year of service and support, including continued development of the PostalOne!ģ automated mail system.

PostalOne! enables businesses across the country to work with USPS to enhance customer service and improve productivity through electronic acceptance, verification and payment systems, eliminating most of the paperwork. PostalOne! supports financial processing of an estimated US$35 billion in annual revenues from business mail services.

In addition, Nortel PEC Solutions will work with USPS to develop and enhance the mail processing support applications needed to handle the estimated two million new addresses added annually.

Nortel PEC Solutions is a Nortel* [NYSE/TSX: NT] subsidiary focused on high-end government solutions and services. The contract modifications with USPS will provide a wide range of systems development, engineering, application development and network administration supporting continued automation of USPS.

ďAlmost every letter sent in the U.S. is routed to its destination with the help of an automated solution that Nortel PEC Solutions put in place for the U.S Postal Service,Ē said Chuck Saffell, chief executive officer, Nortel PEC Solutions. ďWe have had a long, established relationship with the U.S. Postal Service, including development of software supporting automation of a mechanical sorting process that handles millions of pieces of mail each year.Ē

About Nortel PEC Solutions

Nortel PEC Solutions is a trusted partner for governments in supporting the livelihood, security, and well-being of their citizens. Nortel PEC Solutions delivers a comprehensive portfolio of technology and high-end services capable of meeting the demands of the most complex and important systems in the world. Headquartered in Fairfax, Virginia, Nortel PEC Solutions engineers, deploys and manages mission-critical solutions for government, including homeland security, criminal justice and intelligence, defense and civilian agencies within the U.S. Federal Government and at state and local levels. Please visit for additional information.

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 worldís most critical information. Serving both service provider and enterprise customers, Nortel delivers innovative technology solutions encompassing end-to-end broadband, Voice over IP, multimedia services and applications, and wireless broadband designed to help people solve the worldís greatest challenges. Nortel does business in more than 150 countries. For more information, visit Nortel on the Web at For the latest Nortel news, visit

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 outcome of regulatory and criminal investigations and civil litigation actions related to Nortelís restatements and the impact any resulting legal judgments, settlements, penalties and expenses could have on Nortelís results of operations, financial condition and liquidity, and any related potential dilution of Nortelís common shares; the findings of Nortelís independent review and implementation of recommended remedial measures; the outcome of the ongoing independent review with respect to revenues for specific identified transactions, which review will have a particular emphasis on the underlying conduct that led to the initial recognition of these revenues; the restatement or revisions of Nortelís previously announced or filed financial results and resulting negative publicity; the existence of material weaknesses in Nortelís internal control over financial reporting and the conclusion of Nortelís management and independent auditor that Nortelís internal control over financial reporting is ineffective, which could continue to impact Nortelís ability to report its results of operations and financial condition accurately and in a timely manner; the impact of Nortelís and NNLís failure to timely file their financial statements and related periodic reports, including Nortelís inability to access its shelf registration statement filed with the United States Securities and Exchange Commission (SEC); the impact of management changes, including the termination for cause of Nortelís former CEO, CFO and Controller in April 2004; the sufficiency of Nortelís restructuring activities, including the work plan announced on August 19, 2004 as updated on September 30, 2004 and December 14, 2004, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; cautious or reduced spending by Nortelís customers; increased consolidation among Nortelís customers and the loss of customers in certain markets; fluctuations in Nortelís operating results and general industry, economic and market conditions and growth rates; fluctuations in Nortelís cash flow, level of outstanding debt and current debt ratings; Nortelís monitoring of the capital markets for opportunities to improve its capital structure and financial flexibility; Nortelís ability to recruit and retain qualified employees; the use of cash collateral to support Nortelís normal course business activities; the dependence on Nortelís subsidiaries for funding; the impact of Nortelís defined benefit plans and deferred tax assets on results of operations and Nortelís cash flow; the adverse resolution of class actions, litigation in the ordinary course of business, intellectual property disputes and similar matters; Nortelís dependence on new product development and its ability to predict market demand for particular products; Nortelís ability to 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; barriers to international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization and consolidation in the telecommunications industry; changes in regulation of the Internet; the impact of the credit risks of Nortelís customers and the impact of customer financing and commitments; general stock market volatility; negative developments associated with Nortelís supply contracts and contract manufacturing agreements, including as a result of using a sole supplier for a key component of certain optical networks solutions; the impact of Nortelís 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; any undetected product defects, errors or failures; the future success of Nortelís strategic alliances; and certain restrictions on how Nortel and its president and chief executive officer conduct business. For additional information with respect to certain of these and other factors, see the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed by Nortel 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. PEC and PEC Solutions are service marks of PEC Solutions, Inc., d/b/a Nortel PEC Solutions.

Use of the terms ďpartnerĒ and ďpartnershipĒ does not imply a legal partnership between Nortel and any other party.


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