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Telefonica Moviles Consolidates Leadership in Peru, Launching 3G Services Using Technology from Nortel Networks

LIMA, Peru --(Business Wire)-- July 15, 2004 -- The Peruvian operator of the Telefonica Moviles Group, the wireless market leader in Peru(a), has begun offering a comprehensive line-up of third generation (3G) mobile services nationwide using an advanced wireless data network solution from Nortel Networks (NYSE:NT)(TSX:NT).

Telefonica Moviles Peru first launched these new services in November 2003 in the capital city of Lima and has now finalized the first phase of expansions of its 3G network in the provinces.

The new network - based on CDMA2000 1X technology - positions the Telefonica Moviles affiliate as the leading operator in Peru in offering advanced mobile data services like high-speed Web browsing, video downloads, single and multi-user games, sending and receiving e-mails and photos, chat, ring tones, location-based services and many more.

"We're always working to bring the latest in advanced services to our customers," said David Holgado, director of Technology and Services, Telefonica Moviles Peru. "We were able to count on Nortel Networks vast experience in deploying CDMA2000 1X overlays to help us complete this new, world-class mobile infrastructure. Today, that gives us an edge in responding to and even moving ahead of market demand for superior voice quality and advanced mobile data applications."

Nortel Networks began the overlay of Telefonica's 3G CDMA (code division multiple access) network in the fourth quarter of 2003. This included radio base stations and base station controllers, mobility switching, software and network services.

"With the new CDMA 1X infrastructure, Telefonica Moviles Peru has the necessary capacity to manage subscriber growth and roll out new, revenue-generating services across the country," said Alvio Barrios, Telefonica account vice president, Caribbean and Latin America, Nortel Networks. "We continue to work with innovative wireless operators like Telefonica in Latin America and around the world to transform their networks, eliminate boundaries and enrich communications for their customers."

About Telefonica Moviles Peru

A subsidiary of the Telefonica Moviles Group, Telefonica Moviles Peru is the first company in Peru to commercially launch third generation technology, which is already serving about 300,000 customers. At the end of the first quarter of 2004, it had more than 1.63 million active customers, registering an estimated 52 percent market share, confirming its leadership in the country's wireless market. Its growth and profitability have validated Telefonica Moviles Peru as one of the most solid companies in the country.

About Telefonica Moviles

Telefonica Moviles handles the wireless telephony activities of the Telefonica Group around the world. It is one of the first global wireless phone companies and the leader in the Spanish- and Portuguese-speaking wireless markets, with more than 54.5 million customers. It has recently reached an agreement to purchase the Latin American wireless assets of BellSouth, which pushes its customer base to over 66 million. In the quarter of 2004, it had net earnings of 423 million euros, representing 17.9 percent of sequential growth. Telefonica Moviles is traded on the Spanish stock markets and on the New York Stock Exchange under the symbol TEM.

About Nortel Networks

Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at www.nortelnetworks.com or www.nortelnetworks.com/media_center.

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 outcome of Nortel Networks independent review and planned restatement of its previously announced or filed financial results; the impact of the management changes announced on April 28, 2004; the impact of the inability to meet Nortel Networks filing obligations on support facilities and public debt obligations; the sufficiency of Nortel Networks restructuring activities, including the potential for higher actual costs to be incurred in connection with restructuring actions compared to the estimated costs of such actions; continued reductions in spending by Nortel Networks customers; fluctuations in Nortel Networks operating results and general industry, economic and market conditions and growth rates; the communication by Nortel Networks auditors of the existence of material weaknesses in internal control; Nortel Networks ability to recruit and retain qualified employees; fluctuations in Nortel Networks cash flow, level of outstanding debt and current debt ratings; the use of cash collateral to support Nortel Networks normal course business activities; the dependence on Nortel Networks subsidiaries for funding; the impact of Nortel Networks defined benefit plans and deferred tax assets on results of operations and Nortel Networks cash flows; Nortel Networks dependence on new product development and its ability to predict market demand for particular products; Nortel Networks ability to integrate the operations and technologies of acquired businesses in an effective manner; the impact of rapid technological and market change; the impact of price and product competition; barriers to international growth and global economic conditions, particularly in emerging markets and including interest rate and currency exchange rate fluctuations; the impact of rationalization in the telecommunications industry; changes in regulation of the Internet; the impact of the credit risks of Nortel Networks customers and the impact of customer financing and commitments; stock market volatility generally and as a result of acceleration of the settlement date or early settlement of Nortel Networks purchase contracts; the impact of Nortel Networks supply and outsourcing contracts that contain delivery and installation provisions, which, if not met, could result in the payment of substantial penalties or liquidated damages; the future success of Nortel Networks strategic alliances; and the adverse resolution of litigation, investigations, intellectual property disputes and similar matters.

For additional information with respect to certain of these and other factors, see the most recent Form 10 Q/A and Form 10-K/A filed by Nortel Networks with the United States Securities and Exchange Commission. Unless otherwise required by applicable securities laws, 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, the Globemark and Business Without Boundaries are trademarks of Nortel Networks. (a) Based on number of subscribers, per Pyramid Research 1Q-2004 Peru Mobile Forecast.

http://www.tmcnet.com/usubmit/2004/Jul/1056998.htm