Nortel Responds to Tender OfferNortel Responds to Tender Offer

TORONTO -- Nortel Networks Corporation (NSYE:NT)(TSX:NT) announced today that it had received notification that on August 25, 2003, TRC Capital Corporation commenced an unsolicited, below-market "mini-tender" offer to purchase up to 30,000,000 common shares of the company, or approximately 0.76 per cent of Nortel Networks outstanding common shares, at a price of CDN$4.25 per common share.

Nortel Networks wishes to inform its common shareholders that it does not in any way recommend or endorse the TRC Capital Corporation offer and that Nortel Networks is in no way associated with TRC Capital Corporation, the offer or the offer documentation.

Nortel Networks cautions its common shareholders that the offer is being made at a 6.2 per cent discount to the closing price of CDN$4.53 per common share on the Toronto Stock Exchange ("TSX") and US$3.23 on the New York Stock Exchange ("NYSE") on August 22, 2003, the last trading day before the offer commenced, and is below yesterday's closing price of CDN$4.49 on the TSX and US$3.22 on the NYSE. Nortel Networks shareholders are advised that, in addition to being below-market, the offer by TRC Capital Corporation contains other terms which may be disadvantageous to tendering Nortel Networks shareholders. These terms include giving TRC Capital Corporation the right to purchase fewer than the number of common shares tendered even if less than 30,000,000 common shares have been tendered, and the right to delay the take up and payment for the common shares for up to 24 days following the expiration of the offer, during which time shareholders will not be able to withdraw their tendered common shares.

"Mini-tender" offers seek less than 5 per cent of a company's shares, thereby avoiding many disclosure and procedural requirements of the Securities and Exchange Commission ("SEC") and the Canadian Securities Administrators ("CSA"). The SEC has issued an investor alert regarding "mini-tender" offers on its website at www.sec.gov/investor/pubs/minitend.htm. The SEC has said that "mini-tender" offers "have been increasingly used to catch investors off guard" and that investors "may end up selling their securities at below-market prices."

The CSA have also expressed concerns with "mini-tender" offers in an investor alert ("Mini-Tender Offers - Watch Out For Mini-Tender Offers at Below-Market Price!") accessible at www.osc.gov.on.ca/en/About/News/NewsReleases/1999/nr_19990927_mini.htm

Nortel Networks shareholders are advised to consult with their investment advisors and to exercise caution with respect to this offer.

Nortel Networks shareholders who have already tendered are advised that they may withdraw their common shares by providing the written notice described in the TRC Capital Corporation offering documents prior to the expiration of the offer on September 19, 2003.

Nortel Networks Corp.