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NORTEL NETWORKS LIMITED
Computation of Ratio of Earnings to Fixed Charges and Dividends
 Three
    
    Years ended December 31,months ended
    
    
    
    
    
    
    
    
    
    2005
    
    2004
    
    2003(millions of U.S. Dollars)
    
    March 31, 2008
    
    2007
    
    2006
    
    As restated
    
    As restated
    
    As restatedEarnings (loss) from operations
before minority interest, equity in net loss of
associated companies and income taxes
    
    
    (4
    )
    
    
    387
    
    
    
    42
    
    
    
    (120
    )
    
    
    (163
    )
    
    
    301Add:Fixed charges
    
    
    87
    
    
    
    396
    
    
    
    276
    
    
    
    191
    
    
    
    181
    
    
    
    212Amortization of capitalized interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Pre-tax losses of equity investees for which charges
arising from guarantees are included in fixed charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Distributed income from equity investees
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Subtract:Interest capitalized
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Preference security dividend requirements
of consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest in pre-tax income of subsidiaries
without fixed charges
    
    
    67
    
    
    
    73
    
    
    
    21
    
    
    
    12
    
    
    
    11
    
    
    
    24Income (loss) as adjusted
    
    
    16
    
    
    
    705
    
    
    
    297
    
    
    
    59
    
    
    
    7
    
    
    
    487Fixed charges:Interest expense- Long-term debt
    
    
    59
    
    
    
    257
    
    
    
    187
    
    
    
    124
    
    
    
    108
    
    
    
    95- Other
    
    
    6
    
    
    
    24
    
    
    
    22
    
    
    
    6
    
    
    
    8
    
    
    
    261/3 of rental expense on operating leases
deemed to be representative of interest
expense
    
    
    20
    
    
    
    109
    
    
    
    65
    
    
    
    58
    
    
    
    59
    
    
    
    86Preference security dividend requirements of
consolidated subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amortized premiums, discounts and
capitalized expenses related to
indebtedness
    
    
    2
    
    
    
    6
    
    
    
    2
    
    
    
    3
    
    
    
    6
    
    
    
    5Fixed charges
    
    
    87
    
    
    
    396
    
    
    
    276
    
    
    
    191
    
    
    
    181
    
    
    
    212Nortel Networks Limited preference security dividend
    
    
    18
    
    
    
    70
    
    
    
    63
    
    
    
    43
    
    
    
    37
    
    
    
    42Combined fixed charges and preference
security dividend requirements
    
    
    105
    
    
    
    466
    
    
    
    339
    
    
    
    234
    
    
    
    218
    
    
    
    254Ratio of earnings to fixed charges
    
    
    *
    
    
    
    1.8
    
    
    
    1.1
    
    
    
    *
    
    
    
    *
    
    
    
    2.3Ratio of earnings to combined fixed charges
and preference security dividend requirements
    
    
    *
    *
    
    
    1.5
    
    
    
    *
    *
    
    
    *
    *
    
    
    *
    *
    
    
    1.9
 *
    
    The earnings of Nortel Networks Limited were inadequate to cover fixed charges for the three
months ended March 31, 2008 by $71 and for the years ended December 31, 2005 and 2004 by $132 and
$174, respectively.**
    
    The earnings of Nortel Networks Limited were inadequate to cover combined fixed charges and
preference security dividend requirements for the three months ended March 31, 2008 by $89 and for
the years ended December 31, 2006, 2005 and 2004, by $42, $175 and $211, respectively.