BOSTON - Nortel Networks* [NYSE/TSE: NT] unveiled a US$1.9 billion investment to more than double its global Optical Internet production capacity over the next 18 months to meet explosive customer demand for its industry-leading Optical Systems and address opportunities in the high-growth Optical Components market. This follows a total of US$660 million of optical production capacity investments announced over the past nine months.

Nortel Networks expects to create 9,600 new jobs in the United States,Northern Ireland, Canada, United Kingdom, and Australia as part of this expansion. Of the US$1.9 billion, US$1.2 billion will be specifically allocated to expanding production capacity by 3.5 times in North America, United Kingdom, and Australia for open standards-based Optical components. Nortel Networks estimates that its global optical components business will have pro forma revenues (adjusted to reflect market prices) of approximately US$2.5 billion in 2000, up over 200% from 1999. Expansion of Optical Internet Systems Houses production capacity accounts for US$700 million of the investment, increasing capacity by 2.5 times and will include a new Optical Internet Systems house.

"This investment will position us to better meet the explosive demand, foster broader customer choice and open standards, and ensure wider availability of our industry-leading Optical Systems and Components," John Roth, president and chief executive officer, Nortel Networks, said. "We are fueling much of the demand for Optical Components and have been an industry leader in this market for some time, so it makes sense for us to aggressively pursue growth opportunities."

"This investment reflects our determination to lead the Optical Components and Systems market well into the future and ensure that Nortel Networks and its customers can meet-and profit from-the High-Performance Internet," added John Roth. "We are seeing Optical Internet breakthroughs through the combination of innovations in next generation fiber, optical systems and components. Today we are investing to enable a faster time to market for these innovations."

Today's announcement underpins Nortel Networks strategy for the fast-growing Optical Components market. In May 2000, Nortel Networks announced the creation of its High Performance Optical Components Solutions business unit (HPOCS). The business unit is a world leader in supplying open standards-based, high performance Optical Components that enable leading-edge capabilities such as the Company's 10 gigabit Optical Internet systems.

Nortel Networks is a leader in Optical Component technologies and a pioneer in developing devices that have redefined the industry. The company complements its internal world-leading design and fabrication capabilities with the strengths of acquisitions such as Qtera, Xros, CoreTek and Photonics Technologies Inc.

Nortel Networks is a global Internet and communications leader with capabilities spanning Optical, Wireless, Local Internet and eBusiness. The Company had 1999 U.S. GAAP revenues of US$21.3 billion and serves carrier, service provider and enterprise customers globally. Today, Nortel Networks is creating a high-performance Internet that is more reliable and faster than ever before. It is redefining the economics and quality of networking and the Internet, promising a new era of collaboration, communications and commerce. Visit us at www.nortelnetworks.com.

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price and product competition; the dependence on new product development; the impact of rapid technological and market change; the ability of Nortel Networks to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; general industry and market conditions and growth rates; international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of consolidations in the telecommunications industry, the uncertainties of the Internet; stock market volatility; the ability of Nortel Networks to recruit and retain qualified employees; and the impact of increased provision of customer financing by Nortel Networks. For additional information with respect to certain of these and other factors, see the reports filed by Nortel Networks with the United States Securities and Exchange Commission. Nortel Networks disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

*Nortel Networks, the Nortel Networks logo and the Globemark are trademarks of Nortel Networks.