TORONTO -- Nortel Networks Corporation (NYSE:NT)(TSX:NT) today announced that its principal operating subsidiary, Nortel Networks Limited ("NNL"), has obtained a new waiver from Export Development Canada ("EDC") under the EDC performance-related support facility (the "EDC Support Facility"). It is a waiver of certain defaults related to the delay by the Company and NNL in filing their respective 2003 Annual Reports on Form 10-K, Q1 2004 Quarterly Reports on Form 10-Q and Q2 2004 Quarterly Reports on Form 10-Q (collectively, the "Reports"), in each case with the U.S. Securities and Exchange Commission (the "SEC"), the trustees under the Company's and NNL's public debt indentures and EDC. The waiver also applies to certain additional breaches under the EDC Support Facility relating to the delayed filings and the previously announced restatement of the Company's and NNL's financial results.

NNL has obtained a new waiver from EDC that will remain in effect until the earlier of certain events including:

-- the date on which the Reports have been filed with the SEC; or

-- 11:59 p.m. Eastern Daylight Time on September 30, 2004.

The EDC Support Facility provides up to US$750 million in support, all presently on an uncommitted basis. Once the Reports have been filed with the SEC and the related breaches cured, the US$300 million revolving small bond sub-facility of the EDC Support Facility would again become committed support. As of August 15, 2004, there was approximately US$274 million of outstanding support utilized under the EDC Support Facility, US$202 million of which was outstanding under the small bond sub-facility.

If the Company and NNL fail to file the Reports within the waiver period, there can be no assurance that NNL would receive any further waivers or any extensions of the waiver beyond its scheduled expiry date. If the waiver announced today expires prior to the filing of such Reports, EDC would have the right at such time to require NNL to cash collateralize the support outstanding under the EDC Support Facility and to exercise its rights against the collateral under related security agreements. As previously announced, the Company and NNL expect to file the Reports by the end of the third quarter of 2004.

Nortel Networks Ltd.