Nortel announced that it has reached a definitive agreement for the sale of certain assets and the transfer of certain liabilities related to the company's UMTS access business to Alcatel-Lucent. It follows the signing of the non-binding Memorandum of Understanding between the two companies announced September 1, 2006.

The transaction is a US$320 million cash transaction, less significant deductions and transaction related costs. The parties have agreed to target a closing at year end, and in any event, a closing within 90 days of today's announcement. Approximately 1,700 of Nortel's UMTS access business employees will transfer to Alcatel-Lucent.

"The completion of this transaction will allow Nortel to increase resources dedicated to our strategic business priorities. It also positions Alcatel-Lucent to be successful in the UMTS access market with an infusion of great technology and great people," said Mike Zafirovski ( inset ), president and chief executive officer, Nortel. "This transaction is a win-win for both companies, but more importantly, for our customers. We will continue to work with Alcatel-Lucent to ensure the transition is seamless to our customers."

"Nortel is committed to developing the wireless technologies that will deliver 4G Mobile Broadband and this provides one more step in reaching that objective," said Richard Lowe, president, Mobility and Converged Core Networks, Nortel. "Nortel is focused on providing the foundation for the coming mobile video and multimedia revolution that mobile network operators will soon face. At the same time, we will continue delivering superior value to our GSM and CDMA customers, as well as our customers that have deployed our UMTS core networks".

Completion of the transaction is subject to, among other things, the conclusion of consultations with works councils and other employee representatives, finalization of the terms of certain ancillary agreements including a transitional services agreement whereby Nortel will provide to Alcatel-Lucent setup, infrastructure and application services for a defined period of time as well as customary closing conditions including regulatory approvals.

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