TORONTO, ONTARIO -- (MARKET WIRE) -- 01/19/07 -- The board of
directors of Nortel(1) Networks Limited today declared a dividend in
respect of each of the months of January and February 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 in respect of the
month of January is payable on February 12, 2007 to shareholders of
record of such series at the close of business on January 31, 2007.
The dividend on each series in respect of the month of February is
payable on March 12, 2007 to shareholders of record of such series at
the close of business on February 28, 2007.

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", "targets", "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. 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; 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 approval of its proposed class action settlement; 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 restatements 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;

(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; the sufficiency of recently announced
restructuring actions, including the potential for higher actual
costs to be incurred in connection with these restructuring actions
compared to the estimated costs of such actions and the ability to
achieve the targeted cost savings and reductions of Nortel's unfunded
pension liability deficit; 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 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 support 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 support facility; 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 the 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 Nortel's Annual Report on
Form10-K/A, Quarterly Reports on Form 10-Q 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.

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

Contacts:
Nortel
Jay Barta
Media
(972) 685-2381
Email: jbarta@nortel.com

Nortel
Investors
1-888-901-7286 or (905) 863-6049
Email: investor@nortel.com
Website: www.nortel.com