TORONTO -- Nortel Networks (NYSE/TSX: NT) and EADS (stock exchange symbol: EAD) will reorganize their joint telecommunications activities in France and Germany. The companies jointly announced today the increase of their respective individual ownership in, and direct control over, their core businesses in France and Germany, consistent with each of their overall global business strategies.

Nortel Networks will acquire the 42 per cent ownership interest in Nortel Networks Germany GmbH & Co. KG and the 45 per cent ownership interest in Nortel Networks France SAS, currently held by EADS. When completed, these transactions will bring Nortel Networks ownership in each company to 100 per cent. Nortel Networks Germany and Nortel Networks France are responsible for the sales and marketing of Nortel Networks products in those markets. At the same time, EADS will increase its ownership in EADS Telecom, the integrator of EADS turnkey, secure defence-related telecommunications solutions, from 59 per cent to 100 percent as a result of acquiring Nortel Networks current ownership stake in that company.

The announced transactions are subject to the receipt of customary regulatory approvals, which are expected to be received within the third quarter of 2003. Nortel Networks and EADS will continue to work together through technology and commercial agreements in those markets as well as outside of Europe.

“Nortel Networks has enjoyed a strong and growing European presence for a number of years,” said Steve Pusey, president, EMEA (Europe, Middle East, Africa), Nortel Networks. “Establishing 100 per cent ownership in Nortel Networks France and Nortel Networks Germany will reinforce our commitment to these markets, our customers and our core differentiators. It will also be indicative of our continued focus on growth markets with one of the industry’s most comprehensive solutions portfolios.”

“With this step, EADS will concentrate its worldwide telecommunications activities on defence and homeland security solutions,” said Tom Enders, chief executive officer, Defence & Security Systems Division, EADS. ”State-of-the-art communication technologies and networks are at the very heart of military transformation and domestic security programmes of our various customers. This is why the complete control of EADS Telecom greatly enhances our strategy to provide innovative communication systems solutions.”

Nortel Networks Corp.