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Nortel Networks Announces Completion of Acquisition of Qtera


    Continues First Mover Advantage In Optical Internet

    BRAMPTON, Ont., Jan. 28 /CNW/ - Nortel Networks (NYSE/TSE: NT) today
announced the completion of the acquisition of Qtera Corporation, a
privately-held company that produces ultra-long-reach optical networking
systems, for up to US$3.25 billion in Nortel Networks common shares, a portion
of which is contingent upon Qtera achieving certain business objectives.
Qtera's scalable Optical Internet capabilities enable high performance, rapid
wavelength provisioning and restoration, and most importantly, lowest cost
survivable bandwidth.
    "We are moving at the speed of light to maintain our first mover
advantage in the Optical Internet space", said John Roth, president and chief
executive officer, Nortel Networks. "Together we are going to continue to
redefine the speed, reliability, quality and economics of the Internet. This
new, high performance Internet will provide the foundation for a new era of
eBusiness and communications."
    As a result of the merger, Qtera became a wholly-owned subsidiary of
Nortel Networks and each outstanding share of Qtera preferred stock and common
stock was converted into a right to receive 1.3350 Nortel Networks common
shares, for a total of approximately 23 million Nortel Networks common shares.
Approximately 5 million Nortel Networks common shares were reserved for
issuance in respect of Qtera options and warrants assumed by Nortel Networks.
In addition, up to US$500 million in Nortel Networks common shares may be
issued to former Qtera shareholders upon Qtera achieving certain business
objectives.
    Qtera's operations will remain in Boca Raton, Florida and Richardson,
Texas. Qtera president and chief executive officer Fahri Diner will continue
to lead this business as president, reporting to Mike Unger, president,
Optical Networks, Nortel Networks.
    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 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; unanticipated impact of
Year 2000 issues; and the impact of consolidations in the telecommunications
industry. 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.
    %SEDAR: 00000596E



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For further information: Media Relations: David Chamberlin, Nortel 
Networks, (972) 685-4648, ddchamb@nortelnettworks.com; Trade Media: Ann 
Fuller, Nortel Networks, (613) 768-4512, afuller@nortelnetworks.com; 
Investor Relations: Angela McMonagle, Nortel Networks, (905) 863-6044, 
mcmona@nortelnetworks.com;
Archived images on this organization are available through CNW E-Pix at 
www.newswire.ca. Images are free to members of The Canadian Press.
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