BOSTON -- Nortel Networks Corporation (NYSE/TSE: NT) announced today a definitive agreement to acquire Sonoma Systems -- a leader in delivering high-speed integrated video, data and voice communications, simultaneously over a single connection - for up to US$540 million in Nortel Networks common shares, a portion of which is contingent upon Sonoma Systems achieving certain business objectives. The acquisition will enable Nortel Networks to effectively tie the bandwidth and power of the high-performance Optical Internet to the access solutions of the Local Internet. This will allow service providers to deliver high-speed managed services to their business customers. The Yankee Group estimates that the market for delivering these carrier-managed services will reach more than US$18 billion globally by 2002, up from US$10 billion this year.

"We are taking our leadership in the high-performance Optical Internet and extending it to the Local Internet," said Steve Schilling, President, Access Networks, Nortel Networks. "This acquisition represents another building block in our Local Internet capabilities that will enable service providers to offer new, profitable services directly to businesses and consumers."

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