Nortel Declares Preferred Share Dividends

Toronto, Canada (ots/PRNewswire) - The board of directors of
Nortel Networks Limited today declared a dividend on each of the
outstanding Cumulative Redeemable Class A Preferred Shares Series 5
(TSX: NTL.PR.F) and the outstanding Non- cumulative Redeemable Class
A Preferred Shares Series 7 (TSX: NTL.PR.G). The dividend amount for
each series is calculated in accordance with the terms and
conditions applicable to each respective series, as set out in the
Company's articles. The annual dividend rate for each series floats
in relation to changes in the average of the prime rate of Royal
Bank of Canada and The Toronto-Dominion Bank during the preceding
month ("Prime") and is adjusted upwards or downwards on a monthly
basis by an adjustment factor which is based on the weighted average
daily trading price of each of the series for the preceding month,
respectively. The maximum monthly adjustment for changes in the
weighted average daily trading price of each of the series will be
plus or minus 4.0% of Prime. The annual floating dividend rate
applicable for a month will in no event be less than 50% of Prime or
greater than Prime. The dividend on each series is payable on August
14, 2006 to shareholders of record of such series at the close of
business on July 31, 2006.

About Nortel

Nortel is a recognized leader in delivering communications
capabilities that enhance the human experience, ignite and power
global commerce, and secure and protect the world's most critical
information. Our next- generation technologies, for both service
providers and enterprises, span access and core networks, support
multimedia and business-critical applications, and help eliminate
today's barriers to efficiency, speed and performance by simplifying
networks and connecting people with information. Nortel does
business in more than 150 countries. For more information, visit
Nortel on the Web at www.nortel.com. For the latest Nortel news,
visit www.nortel.com/news.

Certain statements in this press release may contain words such as
" could", "expects", "may", "anticipates", "believes", "intends",
"estimates ", "plans", "envisions", "seeks" and other similar
language and are considered forward-looking statements or
information under applicable securities legislation. These
statements are based on Nortel's current expectations, estimates,
forecasts and projections about the operating environment, economies
and markets in which Nortel operates. These statements are subject
to important assumptions, risks and uncertainties, which are
difficult to predict and the actual outcome may be materially
different. Although Nortel believes expectations reflected in such
forward- looking statements are reasonable based upon certain
assumptions, they may prove to be inaccurate and consequently
Nortel's actual results or events could differ materially from its
expectations set out in this press release . Further, actual results
or events could differ materially from those contemplated in
forward-looking statements as a result of the following (i) risks
and uncertainties relating to Nortel's restatements and related
matters including: Nortel's most recent restatement and two previous
restatements of its financial statements and related events; the
negative impact on Nortel and NNL of their most recent restatement
and delay in filing their financial statements and related periodic
reports (including the anticipated delay in filing the Quarterly
Reports on Form 10-Q for the first quarter of 2006) causing them to
breach their public debt indentures and, if the delay extends beyond
June 15, 2006, their obligations under their credit facilities, with
the possibility that the holders of their public debt or NNL's
lenders would seek to accelerate the maturity of that debt, and
causing, if the delay extends beyond June 15, 2006, a breach of
NNL's support facility with EDC with the possibility that EDC would
refuse to issue additional support under the facility, terminate its
commitments under the facility or require NNL to cash collateralize
all existing support; legal judgments, fines, penalties or
settlements, or any substantial regulatory fines or other penalties
or sanctions, related to the ongoing regulatory and criminal
investigations of Nortel in the U.S. and Canada; any significant
pending civil litigation actions not encompassed by Nortel's
proposed class action settlement; any substantial cash payment
and/or significant dilution of Nortel's existing equity positions
resulting from the finalization and approval of its proposed class
action settlement, or if such proposed class action settlement is not
finalized, any larger settlements or awards of damages in respect of
such class actions; any unsuccessful remediation of Nortel's
material weaknesses in internal control over financial reporting
resulting in an inability to report Nortel's results of operations
and financial condition accurately and in a timely manner; the time
required to implement Nortel's remedial measures; Nortel's inability
to access, in its current form, its shelf registration filed with the
United States Securities and Exchange Commission (SEC), and Nortel's
below investment grade credit rating and any further adverse effect
on its credit rating due to Nortel's restatement of its financial
statements; any adverse affect on Nortel's business and market price
of its publicly traded securities arising from continuing negative
publicity related to Nortel's restatements; Nortel's potential
inability to attract or retain the personnel necessary to achieve
its business objectives; any breach by Nortel of the continued
listing requirements of the NYSE or TSX causing the NYSE and/or the
TSX to commence suspension or delisting procedures; any default in
Nortel's filing obligations extending beyond July 15, 2006 for the
2006 First Quarter Form 10-Qs, causing any Canadian securities
regulatory authority to impose an order to cease all trading in
Nortel's securities within the applicable jurisdiction or to impose
such an order sooner if Nortel fails to comply with the alternate
information guidelines of such regulatory authorities; (ii) risks
and uncertainties relating to Nortel's business including: yearly
and quarterly fluctuations of Nortel's operating results; reduced
demand and pricing pressures for its products due to global economic
conditions, significant competition, competitive pricing practice,
cautious capital spending by customers, increased industry
consolidation, rapidly changing technologies, evolving industry
standards, frequent new product introductions and short product life
cycles , and other trends and industry characteristics affecting the
telecommunications industry; any material and adverse affects on
Nortel's performance if its expectations regarding market demand for
particular products prove to be wrong or because of certain barriers
in its efforts to expand internationally; any reduction in Nortel's
operating results and any related volatility in the market price of
its publicly traded securities arising from any decline in its gross
margin, or fluctuations in foreign currency exchange rates; any
negative developments associated with Nortel's supply contract and
contract manufacturing agreements including as a result of using a
sole supplier for key optical networking solutions components, and
any defects or errors in Nortel's current or planned products; any
negative impact to Nortel of its failure to achieve its business
transformation objectives; additional valuation allowances for all or
a portion of its deferred tax assets; Nortel's failure to protect
its intellectual property rights, or any adverse judgments or
settlements arising out of disputes regarding intellectual property;
changes in regulation of the Internet and/or other aspects of the
industry; Nortel's failure to successfully operate or integrate its
strategic acquisitions, or failure to consummate or succeed with its
strategic alliances; any negative effect of Nortel's failure to
evolve adequately its financial and managerial control and reporting
systems and processes, manage and grow its business, or create an
effective risk management strategy; and (iii) risks and
uncertainties relating to Nortel's liquidity, financing arrangements
and capital including: the impact of Nortel's most recent restatement
and two previous restatements of its financial statements; any
acceleration under their public debt indentures and credit
facilities, which may result in Nortel and NNL being unable to meet
their respective payment obligations ; any inability of Nortel to
manage cash flow fluctuations to fund working capital requirements
or achieve its business objectives in a timely manner or obtain
additional sources of funding; high levels of debt, limitations on
Nortel capitalizing on business opportunities because of credit
facility covenants, or on obtaining additional secured debt pursuant
to the provisions of indentures governing certain of Nortel's public
debt issues and the provisions of its credit facilities; any
increase of restricted cash requirements for Nortel if it is unable
to secure alternative support for obligations arising from certain
normal course business activities, or any inability of Nortel's
subsidiaries to provide it with sufficient funding; any negative
effect to Nortel of the need to make larger defined benefit plans
contributions in the future or exposure to customer credit risks or
inability of customers to fulfill payment obligations under customer
financing arrangements; any negative impact on Nortel's ability to
make future acquisitions, raise capital, issue debt and retain
employees arising from stock price volatility and further declines
in the market price of Nortel's publicly traded securities, or any
future share consolidation resulting in a lower total market
capitalization or adverse effect on the liquidity of Nortel's common
shares. For additional information with respect to certain of these
and other factors, see the Company's Annual Report on Form 10-K/A
and NNL's Annual Report on Form 10-K and other securities filings
with the SEC. Unless otherwise required by applicable securities
laws, Nortel disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

(x) Nortel, the Nortel logo and the Globemark are trademarks of
Nortel Networks.

Rückfragehinweis:
For further information: Media: Patti Vernon, +1-(905)-863-1035,
[email protected]; Investors: +1-(888)-901-7286, +1-(905)-863-6049,
[email protected]

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