LG and Nortel to establish joint venture

Plan to provide world-class telecommunications, networking solutions for Korea and global markets

LG Electronics (KSE:06657.KS) and Nortel(1) (NYSE: NT; TSX: NT) announced the signing of a Memorandum of Understanding (MoU) to establish a joint venture for providing high quality, leading edge telecommunications equipment and networking solutions to Korea and other markets globally.
 
The announcement of the proposed 50-50(2) joint venture framework was made in Seoul by S.S. Kim, CEO and Vice-Chairman of LG Electronics and Bill Owens, president and chief executive officer of Nortel.

This impending cooperation supports the strategies of both companies for ongoing development of leading-edge telecommunications equipment and networking solutions to ignite and power global commerce. The proposed joint venture also reflects the companies' commitment to leverage best-in-class resources and expertise by joining forces with leading telecommunications players in key markets.

"To be a global communications provider, it is imperative for us to expand our market share and compete in Asia," Owens said. "Establishing a relationship with a world-class company is an important step. Korea is known for advanced and trailblazing technology in communications as it leads the rest of the world in embracing technology that enhances the human experience."

"Nortel is a true powerhouse in the world's telecommunications equipment market with strong technology and global competitiveness," said S.S. Kim. "LG Electronics is a top-notch telecommunication equipment and solutions provider, attested by its being the first in the world to provide a WCDMA system with video telephony in late 2002. Our joint-venture with Nortel is expected to create greater synergy between LG Electronics' cutting-edge technology and Nortel's expertise in delivering communications capabilities. We are confident that it will become one of the top-ranking players in the global telecommunications equipment market."

"Our intent is to invest in Korea to leverage the wealth of strong R&D talent and technology steeped in LG Electronics and Nortel to develop products and solutions for the global market," said John Giamatteo, president, Asia Pacific, Nortel. "We also intend for the proposed joint venture to market the entire Nortel portfolio of optical, wireless, wireline and enterprise products in Korea and, based on mutual discussion, in other markets as well."

"Telecommunications equipment is very closely related to mobile phones in development," said Mun Hwa Park, President, Mobile Communications Company, LG Electronics. "In developing hi-tech mobile phones, LG Electronics will collaborate with Nortel to be better positioned in setting standards for next-generation devices and developing technologies. Based on this, LG Electronics is expected to reduce the developing time for next-generation terminals and maintain its leading technology in global mobile phone market."

The proposed joint venture is subject to execution of a definitive agreement. The two companies expect to complete this transaction in the second quarter of 2005.

(2) In the proposed joint venture, Nortel has 50 percent plus one share.