Nortel Networks One Step Closer To "Total Independence" - Company Financial Information

Cambridge Telcom Report, May 1, 2000

Nortel Networks (NYSE/TSE: NT) received overwhelming approval Thursday from its shareholders for BCE Inc.'s plan to distribute to its shareholders an approximate 35 percent ownership interest in Nortel Networks, bringing the Internet powerhouse one step closer to "total independence." BCE, which is expected to retain an approximate two percent ownership interest in Nortel Networks, had announced in January 2000 its intention to make the distribution.

"With the approval of the plan by Nortel Networks shareholders, we are one step closer to being a totally independent, widely-held company on an equal footing with the competition. There has never been a more exciting time in the communications and Internet industries," said John Roth, president and chief executive officer, Nortel Networks.

"The plan of arrangement will enable BCE shareholders to directly own Nortel Networks, one of the most valuable companies in the world and the most valuable in Canada, in terms of market capitalization. Nortel Networks shareholders will also benefit because we will have a broader, more diversified shareholder base. Having more shares available to the market will help enable others to participate as we move to unlock the tremendous potential that we have as a leader at the heart of the Internet revolution," he said.

The shareholders approved the plan of arrangement at the company's annual and special shareholders' meeting in Ottawa, a day after the approval by BCE shareholders. BCE and Nortel Networks will seek the required court approval on April 28, 2000. If court approval is granted the plan of arrangement is expected to take effect on May 1, 2000.

Under this plan of arrangement, a new publicly traded Canadian company will own all of the common shares of Nortel Networks. The current Nortel Networks public common shareholders will receive one common share in the new company in exchange for each Nortel Networks common share, so that their level of investment is retained. BCE's approximately 500,000 shareholders will retain their BCE shares and receive approximately .78 of a common share in the new company for each BCE common share held. As the last step in the plan of arrangement, the new company will divide its common shares on a 2-for-1 basis.

As a result, Nortel Networks public shareholders will receive two common shares of the new company for each Nortel Networks common share held, while BCE shareholders will receive approximately 1.56 common shares of the new company for each BCE common share held.

Under the plan of arrangement, the new company will be named Nortel Networks Corporation and retain the same stock symbol NT on both the NYSE and Toronto stock exchanges. The share exchange will not be taxable to Nortel Networks public shareholders in Canada or the U.S.

"We are extremely well positioned to take advantage of the opportunities resulting from demand for the high-performance Internet," Roth said. "We are at the leading edge of the Optical and Wireless Internet revolution, and have first-mover advantage in the critical markets for Internet Telephony and eBusiness capabilities. As well, we look forward to our continued leadership as Canada's premier high technology company and as the primary driver of the country's multi-billion dollar technology ecosystem."

In other matters considered at the shareholders meeting, Nortel Networks shareholders separately approved a 2-for-1 stock split of Nortel Networks common shares that will occur only if the plan of arrangement is not implemented.

Robert E. Brown, president and chief executive officer of Bombardier, Inc., was elected to the board of directors for the first time, while Ralph M. Barford, who had served on the board since April 28, 1994, retired.

The shareholders also approved a new stock option plan, a reduction in the size of the board of directors and a Shareholders' Rights Plan for the new public company to be created as part of the plan of arrangement. The Shareholders' Rights Plan will only become effective upon the implementation of the plan of arrangement.

Nortel Networks is a global leader in telephony, data, eBusiness and wireless solutions for the Internet. The Company had 1999 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 refining the economics and quality of networking and the Internet through United Networks that promise a new era of collaboration, communications and commerce. Visit us at www.nortelnetworks.com.