##### 



Exhibit 12

NORTEL NETWORKS LIMITED
Computation of Ratio of Earnings from Continuing Operations to Fixed Charges

|                                                               |                                                                                |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |       |       |       | 
|-------------------------------------------------------------- | ------------------------------------------------------------------------------ | ------------------------------ | ----------------- | -------- | ------------------------ | ----- | --------- | --------- | ----- | ----- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | ---- | ----- | ----- | ----- | ----- | 
|                                                               |                                                                                |                                |                   |          | Years ended December 31,
|                                                              
|(millions of U.S. dollars)                                     |                                                                                | 2002                           |                   | 2001     |                          | 2000  |           | 1999      |       | 1998 
|                                                              
|Earnings (loss) from continuing operations before income taxes |                                                                                |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |      
|                                                               | as reported in the consolidated statements of operations                       |                                |                   | (3,486.0 | )                        |       |           | (14,628.0 | )     |       |       | 329.0 |       |      |       | 346.0 |       |      |       | (73.0 | )    
|                                                              
|Add (deduct)                                                   |                                                                                |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |      
|                                                               | Interest expense                                                               |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |       |      
|                                                               |                                                                                |                                |  long-term debt  |          |                          | 131.0 |           |           |       | 165.0 |       |       |       | 86.0 |       |       |       | 93.0 |       |       |       | 107.0 | 
|                                                               |                                                                                |                                |  other           |          |                          | 41.0  |           |           |       | 119.0 |       |       |       | 82.0 |       |       |       | 71.0 |       |       |       | 115.0 | 
|                                                               | Interest expense of finance subsidiaries                                       |                                |                   |         |                          |       |           |          |       |       |       |      |       |      |       |      |       |      |       |      |      
|                                                               | Unconsolidated subs                                                            |                                |                   |         |                          |       |           |          |       |       |       |      |       |      |       |      |       |      |       |      |      
|                                                               | 1/3 of rental expense on operating leases deemed to be                         |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |       |      
|                                                               |                                                                                | interest expense               |                   |          | 155.0                    |       |           |           | 249.0 |       |       |       | 225.0 |      |       |       | 185.0 |      |       |       | 143.0 |      
|                                                               | Amortized premiums, discounts and capitalized
expenses related to indebtedness |                                |                   | 6.9      |                          |       |           | 4.0       |       |       |       | 1.0   |       |      |       | 1.0   |       |      |       | 1.0   |      
|                                                              
|                                                               |                                                                                |                                | Minority Interest |          | (23.0                    | )     |           |           | (22.0 | )     |       |       | 55.0  |      |       |       | (1.0  | )    |       |       | (15.0 | )    
|                                                              
|                                                               | Undistributed earnings of less than                                            |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |       |      
|                                                               |                                                                                | 50% owned associated companies |                   |          | 9.0                      |       |           |           | 134.0 |       |       |       | 29.0  |      |       |       | (41.0 | )    |       |       | 64.0  |      
|                                                              
|Income (loss) as adjusted                                      |                                                                                |                                | (3,166.1          | )        |                          |       | (13,979.0 | )         |       |       | 807.0 |       |       |      | 654.0 |       |       |      | 342.0 |      
|                                                              
|Fixed charges:                                                 |                                                                                |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |      
|                                                               | Interest expense                                                               |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |       |      
|                                                               |                                                                                |                                |  long-term debt  |          |                          | 131.0 |           |           |       | 165.0 |       |       |       | 86.0 |       |       |       | 93.0 |       |       |       | 107.0 | 
|                                                               |                                                                                |                                |  other           |          |                          | 41.0  |           |           |       | 119.0 |       |       |       | 82.0 |       |       |       | 71.0 |       |       |       | 115.0 | 
|                                                               | Interest expense of                                                            |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |       |      
|                                                               |                                                                                | finance subsidiaries           |                   |         |                          |       |           |          |       |       |       |      |       |      |       |      |       |      |       |      |      
|                                                               | Unconsolidated Subs                                                            |                                |                   |         |                          |       |           |          |       |       |       |      |       |      |       |      |       |      |       |      |      
|                                                               | 1/3 of rental expense on operating leases                                      |                                |                   |          |                          |       |           |           |       |       |       |       |       |      |       |       |       |      |       |       |      
|                                                               |                                                                                | deemed to be interest expense  |                   | 155.0    |                          |       |           | 249.0     |       |       |       | 225.0 |       |      |       | 185.0 |       |      |       | 143.0 |      
|                                                              
|                                                               | Amortized premiums, discounts and
capitalized expenses related to indebtedness |                                |                   | 6.9      |                          |       |           | 4.0       |       |       |       | 1.0   |       |      |       | 1.0   |       |      |       | 1.0   |      
|                                                              
|                                                               |                                                                                |                                | 333.9             |          |                          |       | 537.0     |           |       |       | 394.0 |       |       |      | 350.0 |       |       |      | 366.0 |      
|                                                              
|Ratio of earnings from continuing operations
to fixed charges  |                                                                                |                                | **                |          |                          |       | **        |           |       |       | 2.0   |       |       |      | 1.9   |       |       |      | **    |      
|                                                              



|** |  | The earnings of Nortel Networks Limited were inadequate to cover fixed
charges for the years ended
December 31, 2002, 2001, and 1998 by $3,500, $14,516 and $24, respectively.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------