Audience: All Nortel Networks Employees



*** EXTREMELY IMPORTANT***

Nortel Networks Corporation today issued a press release announcing that it will need to delay the filing of its annual reports on Form 10-K for the year ended December 31, 2003 and its principal operating subsidiary Nortel Networks Limited with the U.S. Securities and Exchange Commission (SEC), which include their annual financial statements for 2003.

As a consequence of the delay of our public filings discussed in today's press release, certain transactions in available investment options under all of the Nortel Networks employee investment plans, stock options plans and stock purchase plans are being suspended. The suspension of these activities is required because of certain U.S. and Canadian regulatory requirements.

As a result, EFFECTIVE IMMEDIATELY, the following plans are affected:

  - Nortel Networks Long-Term Investment Plan – US 401K
  - Nortel Networks Limited Investment Plan/Savings Plan for
    Employees – Canada
  - Nortel Networks Company Savings Plan – France (Plan d'Epargne
    D'Enterprise – PEE)
  - Nortel Networks Share Participation Scheme and Nortel Networks
    Shannon Share Participation Scheme -- Ireland
  - Stock Options granted under the Nortel Networks 1986 or 2000
    Stock Option Plan and any assumed Stock Option Plans
  - Nortel Networks Stock Purchase Plan
  - Nortel Networks Stock Purchase Plan for Members of the Savings
    and Retirement Program (SARP-Canada)

To determine how these changes might affect you, please read the following information carefully. If you have additional questions, please submit them by responding to this e-mail. We will post the most frequent questions with answers in the next several days on a website that will provide ongoing updates and information.

----------------------------------------------------------------------

WHAT IS HAPPENING?

As a consequence of the delay of our public filings discussed in today's press release, please be advised that the following transactions in Nortel Networks Corporation common shares are required to be suspended, effective immediately:

-- The purchase of units in a Nortel Networks stock fund under any of our employee investment plans, including the Nortel Networks Long-Term Investment Plan (US 401K), the Nortel Networks Limited Investment Plan for Employees – Canada, the Nortel Networks Employee Savings Plan and the Nortel Networks Company Savings Plan (France);

-- The exercise of outstanding stock options granted under the Nortel Networks 1986 or 2000 stock option plan or any assumed stock option plan, including the suspension of exercise of vested options; and

-- The purchase of Nortel Networks common shares under any of our stock purchase plans, including purchases using payroll amounts previously deducted from employee earnings or Nortel Euros previously allocated by employees that are pending investment under our Nortel Networks Stock Purchase Plans or the Irish Share Participation Schemes.

Please note that any attempt to make a purchase of Nortel Networks common shares or an exercise of stock options will not be recognized by the plans' administrators.  Outlined below is a brief summary of the effect of the suspension under the various plans. Additional information will be provided to you over the next several days.

If you are a reporting or non-reporting insider or you have been notified that you are subject to a Trade Prohibition Memorandum, you continue to be prohibited from trading in Nortel Networks securities until the next Window Period.

I.  INVESTMENT PLANS

NORTEL NETWORKS LONG-TERM INVESTMENT PLAN ("LTIP" – 401K PLAN FOR EMPLOYEES OF NORTEL NETWORKS INC. AND OTHER ADOPTING U.S. SUBSIDIARIES)

Effective immediately, your employee elected contributions and matching company contributions under the LTIP will no longer be invested in the Nortel Networks Corporation (NNC) Stock Fund.  Your employee elected contributions and matching company contributions will be automatically transferred to the Fixed Income Investment Fund.  However, you can change your investment option for your employee elected contributions and matching company contributions to any of the other investment funds available under the LTIP by contacting the Nortel Networks Long-Term Savings Center toll-free at (800) 726-0026 or by requesting your change through the LTIP's website at http://resources.hewitt.com/nortelnetworks .  If you fail to make an election regarding your investment options, your employee elected contributions and matching company contributions will continue to be invested in the Fixed Income Investment Fund.

You will be unable to transfer your account balance held in other investment funds to the NNC Stock Fund.  Your account balance held in the NNC Stock Fund (if any) will remain in the NNC Stock Fund, however, you will still have the option to transfer your account balance held in the NNC Stock Fund to any of the other 14 investment funds or you may withdraw your investment in the NNC Stock Fund to the extent permitted under the LTIP.  During this suspension period, any withdrawals of your investment in the NNC Stock Fund can only be made in cash.  Transfers and withdrawals can be made through the LTIP's website at http://resources.hewitt.com/nortelnetworks  or by calling the Savings Center toll-free at (800) 726-0026.

We will let you know when the suspension of investments in the NNC Stock Fund ends and the applicable procedures then available to you to invest in the NNC Stock Fund on a going forward basis.

During this suspension period, except as outlined above, the LTIP will continue as normal.

NORTEL NETWORKS LIMITED INVESTMENT PLAN FOR EMPLOYEES – CANADA AND NORTEL NETWORKS EMPLOYEE SAVINGS PLAN ("CANADIAN INVESTMENT PLANS")

Effective immediately, your employee contributions and the matching company contributions under the Canadian Investment Plans will no longer be invested in the Nortel Networks Common Stock Fund (Stock Fund).  Your employee contributions and matching company contributions will be automatically transferred to the McLean Budden Money Market Fund.  However, you can change your investment option for your employee contributions and matching company contributions to any of the other investment funds available under the Canadian Investment Plans by contacting Sun Life toll-free at 1-800-668-8229 or 416-408-4800 (interactive voice response system) or by requesting your change through Sun Life Financial's member website at www.sunlife.ca/member.  In the absence of any investment fund option instructions, your employee contributions and matching company contributions will continue to be invested in the McLean Budden Money Market Fund until Sun Life is notified otherwise. 

You will also be unable to transfer your account balance held in other investment funds to the Stock Fund.  Your account balance held in the Stock Fund (if any) will remain in the Stock Fund, however, you still have the option to transfer your account balance in the Stock Fund to any of the other 10 investment funds or you may withdraw your investment in the Stock Fund to the extent permitted under the Canadian Investment Plans.  During this suspension period, any withdrawals of your investment in the Stock Fund can only be made in cash.  Transfers and withdrawals can be made through Sun Life Financial's website at www.sunlife.ca/member or by contacting SunLife at 1-800-668-8229 or 416-408-4800 (interactive voice response system).

We will let you know when the suspension of investments in the Stock Fund ends and the applicable procedures then available to you to invest in the stock fund on a going forward basis.

During this suspension period, except as outlined above, the Canadian Investment Plans will continue as normal.

NORTEL NETWORKS COMPANY SAVINGS PLAN – FRANCE (PLAN D'EPARGNE D'ENTERPRISE – PEE) ("SAVINGS PLAN")

Effective immediately, purchases of Nortel Networks common shares will be suspended under the Savings Plan.  To the extent permitted by applicable law, actions will be taken in order that your contributions and matching company contributions in the Nortel Networks collective investment fund continue but that all investments under the fund are made in other permissible investments.

During this period, except as outlined above, the Savings Plan will continue as normal. You will still be able to change your participation in the Savings Plan (i.e. suspension/enrolment/percentage change) or transfer all or some of your assets in the Nortel Networks collective investment fund to the money market fund (called the Arcancia Securité 207) by contacting Société Générale at www.esalia.com or at Voice server* (08 92 68 15 21).

We will let you know when purchases of Nortel Networks common shares in the collective investment fund may resume.  At such time, the fund will return to its customary investment strategy of holding a maximum of approximately two-thirds of its assets in Nortel Networks common shares and the remaining one-third in monetary assets.

II. STOCK OPTION PLANS

NORTEL NETWORKS STOCK OPTIONS AND ASSUMED STOCK OPTIONS PLANS

Effective immediately, you will not be permitted to exercise any stock options under the Nortel Networks 1986 Stock Option Plan, as Amended and Restated, the Nortel Networks 2000 Stock Option Plan or under any of the assumed stock option plans, whether or not such options are or become vested, until further notice.

However, you are not prohibited from selling any common shares that you purchased upon any earlier exercise of stock options.

III. STOCK PURCHASE PLANS

NORTEL NETWORKS STOCK PURCHASE PLAN ("NNSPP") AND NORTEL NETWORKS STOCK PURCHASE PLAN FOR MEMBERS OF THE SAVINGS AND RETIREMENT PROGRAM ("SARP")

Effective immediately, purchases of Nortel Networks common shares will be suspended under the NNSPP and SARP.  No additional employee payroll deductions will be accepted under the NNSPP or SARP.

All of the payroll deductions made from your compensation for the current purchase period that began on January 1, 2004 (and which was originally scheduled to end on March 31, 2004) will not be used to purchase Nortel Networks Corporation common shares.  Instead, all such payroll deductions will be refunded to you, without interest, as soon as administratively practicable.

The April 1, 2004 offering period will not open as scheduled and no payroll deductions will be made.  We will let you know when the suspension of offering periods end under the NNSPP and SARP and the applicable procedures then available to you to participate on a going forward basis.

During this suspension period, you are not required to close your NNSPP account with Mourant.  You can continue to hold your common shares in your account.  As always, you may request a sale, withdrawal or transfer of your common shares held with Mourant to a personal brokerage account at any time.  To initiate a sale, transfer or withdrawal, you may contact Mourant at www.eshareplan.com/nnspp or the Interactive Voice Response System at ESN 560-7979, (866) 574-0331 or (011) 44 207 107 9532.

If you are not a member of the NNSPP you will be unable to join the NNSPP until an offering period under the NNSPP or SARP begins again.  We will inform you when the ability to join the NNSPP becomes available.

NORTEL NETWORKS (IRELAND) SHARE PARTICIPATION SCHEME AND NORTEL NETWORKS SHANNON SHARE PARTICIPATION SCHEME ("IRISH PARTICIPATION SCHEMES")

Effective immediately, purchases of Nortel Networks common shares will be suspended under the Irish Participation Schemes.  No additional pre-tax salary deductions will be accepted under the schemes during the suspension period.

Your pre-tax salary deductions and your Nortel Euros (allocated to the Irish Participation Schemes under the Nortel Networks Flex program) for the current quarter will not be used to purchase Nortel Networks common shares on March 12, 2004.  Instead, all salary deductions will be refunded to you, through payroll, without interest, as soon as administratively practicable.  We will provide additional information shortly about the treatment of your Nortel Euros allocated to the schemes.  No further pre-tax salary deductions will be made during the suspension period.

We will let you know when the suspension of the operation of the Irish Participation Schemes ends and will also advise you of your position regarding participation on a going forward basis.

Nortel Networks common shares that you have previously purchased under the Irish Participation Schemes will continue to be held by the Trustee for a minimum period of two years from the date on which the common shares were allocated to you, (unless you cease employment in circumstances where the schemes permit earlier release).

GENERAL CONTACT INFORMATION

We encourage you to contact the plan administrators if you have any questions about a plan that you participate in or if you wish to a make a transaction or withdrawal under a plan.  You can also contact Global Employee Services within their region at the following numbers:

- Canadian Employees:  ESN 333-4636 or Externally at 1-800-684-4636
- U.S. Employees: ESN: 352-4636 or Externally at 1-800-676-4636
- EMEA Employees (except France): ESN 783-1783 or Externally at 44-
  (0)-1707-62-1783
- France Employees: ESN 574-4696 or Externally at 33-(01)-69 55 46 96
- Greater China and Asia Pacific Employees:  ESN 631-2255 or
  Externally  852-2100-2255

Nortel Networks Retiree's Association ----- Web Master: Bob Starkes