Nortel Wins at Pelephone

TEL AVIV, Israel -- Pelephone, Israel's first CDMA third generation (3G) wireless network technology operator, has selected Nortel Networks (NYSE:NT)(TSX:NT) as the exclusive provider of a CDMA2000 1xEV-DO broadband wireless network in a two-year supply agreement.

Nortel Networks will deploy radio access equipment across Pelephone's national wireless footprint to enable broadband mobile services across Israel. Pelephone currently serves approximately 2 million subscribers across the country.

The network upgrades will position Pelephone to offer wireless data services to its customers, such as personalized video downloads and streaming (MPEG-4), regional content such as live television news and sports broadcasts, and other consumer applications. For businesses, Pelephone plans to offer e-mail with large attachments, secure intranet access and other mobile office applications.

"Nortel Networks ability to move swiftly and cost-effectively is once again positioning Pelephone as first-to-market in delivering a new era of mobile data services in 3G technology to Israel," said Jacob Gelbard, president, Pelephone Communications Ltd. "Nortel Networks leadership position in 1xEV-DO technology and their 20-year position in the Israeli market make them an ideal partner for this project."

"2004 will be remembered as the year wireless went broadband, and we are very pleased to be working with leading operators like Pelephone in ushering in this new mobile broadband era," said Sorin Lupu, managing director, Nortel Networks Israel. "We are very proud to expand our presence in Pelephone's national footprint. We remain committed not only to helping position Pelephone to drive new revenue opportunities through data services, but also to driving down the overall cost of operating their network."

The first phase of the network deployment is expected to enable 3G 1xEV-DO service for the metropolitan area of central Israel by the end of August 2004. Expanded coverage across the remainder of Pelephone's national footprint is expected to be commercially available towards the end of 2004.

Nortel Networks is the primary provider of Pelephone's existing CDMA2000 1X wireless network, which was launched as Israel's first commercial 3G-technology wireless network last year. Nortel Networks is the sole supplier of Pelephone's core network (packet and circuit) across Israel, and is now the sole supplier of 1xEV-DO radio equipment.

Under the new supply agreement, Nortel Networks will deploy Low Density and Compact CDMA Metro Cell radio base stations (BTS), CDMA Enhanced Base Station Controllers (EBSC), and CDMA Packet Data Serving Nodes (PDSNs).

The Nortel Networks Compact Metro Cell is a highly-dense, scalable and power-efficient 3G base station that provides the largest carrier density of any macro base station available in the industry. The company's EBSC is the industry's highest capacity CDMA2000 1X voice and packet data platform -- available in a reduced footprint -- and is scaleable to support capacity increases as needed by operators.

Nortel Networks will provide network services including turnkey design and engineering optimization, installation and commissioning. Nortel Networks will also provide 'cutover' and migration services to migrate existing CDMA2000 1X hardware and software from Nortel Networks and other vendors to support 1xEV-DO.

Nortel Networks Ltd.

Pelephone Communications Ltd.