KPN Transforms Communications With Nortel IP Technology

Leading Dutch Operator Moves Entire Organization to IP Communications Platform

DECEMBER 15, 2005, AMSTERDAM, The Netherlands - KPN has announced it is moving to an all IP-based, next generation communications platform based on Nortel* [NYSE/TSX: NT] technology. Roll-out of the new voice and multimedia capability across KPN will occur in phases beginning in February 2006.

KPN selected Nortel to bring increased productivity and simplicity to employee communications through user friendly application interfaces that integrate communications services into a single platform. Nortel’s all IP-based voice and multimedia solutions allow KPN to bring increased control to network management and help reduce costs while being inherently flexible and scalable.

“KPN believes in an all-IP world and this move to an IP-based infrastructure is of strategic importance to the company,” said Bas Burger, managing director of KPN EnterCom. “Therefore we have chosen to work with a top notch and reliable partner such as Nortel to optimize KPN’s enterprise network.”

“Our customers will benefit from this innovation as the communication and contact with them will be improved. Furthermore we are practicing what we preach in migrating to a single IP-based communications platform, demonstrating the practicality and benefits of such a move to all of our customers,” Burger said.

Using Nortel’s multimedia communications platform, KPN’s employees will be able to use their PDAs, laptops and PCs for voice, instant message, file sharing, email and video conference applications. KPN’s employee communications will be further enhanced by presence awareness, where the connection status of a user can be viewed before attempting communications. This allows employees to choose the most appropriate means of communication depending on the user’s status. The new system integrates fully with existing fixed and mobile voice communications.

“Through our work with KPN, Nortel is demonstrating the reality of our vision for the virtual enterprise, namely anywhere, anytime communication,” said Darryl Edwards, president, Northern Europe, Nortel. “The versatility of Nortel’s IP solutions for enterprise will enhance KPN’s credibility as a provider of next generation communications systems in The Netherlands by allowing them to fully realise the benefits of all-IP communications.”

KPN is using Nortel’s Communications Server 1000 to provide 20,000 voice over IP users. Among these 20,000 employees an initial 12,000 employees will also be using Nortel’s Multimedia Communications Server 5100 for voice, data, messaging, video and presence awareness. The mix of full-multimedia and voice over IP recognises the individual requirements of KPN employees for various types of communication.

About KPN
KPN offers telecommunication services to both consumers and businesses. KPN’s core activities are telephony and data services through our fixed network in the Netherlands, mobile telecom services in the Netherlands, Germany and Belgium and data services in Western Europe. KPN is market leader in the major segments of the Dutch telecom market and is actively growing its market share in the new IP and DSL markets. Through E-Plus in Germany and BASE in Belgium, KPN holds strong positions in the mobile markets of these countries. As of September 30, 2005, KPN served 7.1m fixed-line subscribers and 2.0m Internet customers in the Netherlands as well as 17.8m mobile customers in Germany, the Netherlands and Belgium, while KPN employed 28,749 individuals (26,316 FTEs). KPN was incorporated in 1989. KPN’s shares are listed on the stock exchanges of Amsterdam, New York, London and Frankfurt.

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. 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 world’s greatest challenges. 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 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 Nortel’s restatements and the impact any resulting legal judgments, settlements, penalties and expenses could have on Nortel’s results of operations, financial condition and liquidity, and any related potential dilution of Nortel’s common shares; the findings of Nortel’s 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 Nortel’s previously announced or filed financial results and resulting negative publicity; the existence of material weaknesses in Nortel’s internal control over financial reporting and the conclusion of Nortel’s management and independent auditor that Nortel’s internal control over financial reporting is ineffective, which could continue to impact Nortel’s ability to report its results of operations and financial condition accurately and in a timely manner; the impact of Nortel’s and NNL’s failure to timely file their financial statements and related periodic reports, including Nortel’s 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 Nortel’s former CEO, CFO and Controller in April 2004; the sufficiency of Nortel’s 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 Nortel’s customers; increased consolidation among Nortel’s customers and the loss of customers in certain markets; fluctuations in Nortel’s operating results and general industry, economic and market conditions and growth rates; fluctuations in Nortel’s cash flow, level of outstanding debt and current debt ratings; Nortel’s monitoring of the capital markets for opportunities to improve its capital structure and financial flexibility; Nortel’s ability to recruit and retain qualified employees; the use of cash collateral to support Nortel’s normal course business activities; the dependence on Nortel’s subsidiaries for funding; the impact of Nortel’s defined benefit plans and deferred tax assets on results of operations and Nortel’s cash flow; the adverse resolution of class actions, litigation in the ordinary course of business, intellectual property disputes and similar matters; Nortel’s dependence on new product development and its ability to predict market demand for particular products; Nortel’s 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 Nortel’s customers and the impact of customer financing and commitments; general stock market volatility; negative developments associated with Nortel’s 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 Nortel’s 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 Nortel’s 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.
Use of the terms “partner” and “partnership” does not imply a legal partnership between Nortel and any other party.

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Pat Cooper

Nortel

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