Nortel Networks Enhances Ottawa R&D Facilities with US$143 million Investment

Third Investment Announcement for National Capital Region Since November 1999

OTTAWA, Ont. -Nortel Networks* [NYSE/TSE: NT] announced today it will invest approximately US$143 million to create an additional 600,000 square feet of space for approximately 2,500 research and development staff in the National Capital Region. This announcement builds on the corporation s previous investments in Ottawa including a US$143 million investment announced in November 1999, and US$102 million in February 2000. Today s announcement will strengthen the company s first mover advantage and global leadership in Optical Internet systems, Wireless solutions, and other core technologies. Nortel Networks President and Chief Executive Officer John Roth said, "This significant new investment will help Nortel Networks accelerate its capacity for designing and creating the networks of tomorrow. We re moving at web speed to meet growing customer demand for our market-leading Optical Internet capabilities and other core technologies."

The new investment will be spent on capital and leasing costs, and operating expenses for three new buildings, each of approximately 200,000 square feet. Each site will accommodate approximately 850 knowledge workers. Some employees will be located from other sites, but slightly more than half are expected to be new hires.

Nortel Networks is the largest private-sector employer in the National Capital Region. From January to mid-April of this year, the corporation added more than 2,600 experienced hires, new grads, and student co-ops in the Ottawa region.

The new facilities are:

Lab 9 at the corporation s Carling site. Construction is already under way and is expected to be completed by the first quarter of 2001. This facility will be used to accommodate growth in Internet Telephony solutions and other technology. The second building, Woodline 3, will be situated in the Baseline/Woodroffe area, and will be devoted primarily to R&D in the wireless arena. It will be a leased facility, and is expected to be ready for occupancy in the first quarter of 2001. The final 200,000-square-foot lab will be located at a site yet to be determined. This leased building will be used for the development of Optical Internet technology. The leased facility is expected to be occupied by the second quarter of 2001. Further details on this building will be announced by the end of June. Mr. Roth added that, "Nortel Networks global R&D headquarters in the Ottawa area has the largest concentration of the corporation s employees in the world, and is the focal point for advanced research covering all of the company s lines of business. The critical mass of R&D expertise in this region will help support our leadership in optical networking and the high performance Internet well into the new millennium."

Nortel Networks is a global leader in telephony, data, eBusiness, and wireless solutions for the Internet. The Company had 1999 U.S. GAAP revenues of US $21.3 billion and serves carrier, service provider and enterprise customers globally. Today, Nortel Networks is creating a high-performance Internet that is more reliable and faster than ever before. It is redefining the economics and quality of networking and the Internet through Unified Networks that promise a new era of collaboration, communications and commerce. Visit us at www.nortelnetworks.com.

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 impact of price and product competition; the dependence on new product development; the impact of rapid technological and market change; the ability of Nortel Networks to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; general industry and market conditions and growth rates; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of consolidations in the telecommunications industry, the uncertainties of the Internet; stock market volatility; the ability of Nortel Networks to recruit and retain qualified employees; and the impact of increased provision of customer financing by Nortel Networks. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. Nortel Networks 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 Networks, the Nortel Networks logo, the Globemark, Unified Networks and How the world shares ideas are trademarks of Nortel Networks.

Contact for Press and Analysts:

Paul Hornbeck
Nortel Networks
613-763-4439
pghorn@nortelnetworks.com