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Exhibit 99.2  Nortel
Networks Limited
8200 Dixie Road, Suite 100
Brampton, Ontario, Canada L6T 5P6
    
    (NORTEL BUSINESS WITHOUT BOUNDARIES LOGO)
 January 14, 2005 Export Development Canada
151 OConnor Street
Ottawa, Ontario
Canada K1A 1K3
Attention: David Guy Ladies and Gentlemen: We refer to the Master Facility Agreement dated February 14, 2003, by and between
Nortel Networks Limited (the Company) and Export Development Canada
(EDC), as amended by that certain Amending Agreement No. 1 To Master Facility
Agreement dated as of July 10, 2003, by and between the Company and EDC, as further amended
by that certain letter agreement by and between the Company and EDC dated as of March 29,
2004 (the March 29 Letter), as further amended by that certain letter agreement
by and between the Company and EDC dated as of May 28, 2004 (the May 28 Letter),
as further amended by that certain letter agreement by and between the Company and EDC
dated as of August 20, 2004 (the August 20 Letter), as further amended by that
certain letter agreement by and between the Company and EDC dated as of September 29, 2004
(the September 29 Letter), as further amended by that certain letter agreement by
and between the Company and EDC dated as of October 29, 2004 (the October 29
Letter), as further amended by that certain letter agreement by and between the
Company and EDC dated as of November 19, 2004 (the November 19 Letter), and as
further amended by that certain letter agreement by and between the Company and EDC dated
as of December 10, 2004 (the December 10 Letter, and together with the March 29
Letter, the May 28 Letter, the August 20 Letter, the September 29 Letter, the October 29
Letter and the November 19 Letter, the Letters). The Master Facility Agreement, as so amended, is referred to hereinafter as the
EDC Agreement. Capitalized terms used but not defined herein are used with the
meanings given to those terms in the EDC Agreement and the Master Indemnity Agreement. We also refer to (i) the Indenture dated as of November 30, 1988 (the 1988
Indenture) between the Company and The Bank of New York as successor trustee to The
Toronto-Dominion Bank Trust Company; (ii) the Indenture dated as of February 15, 1996 (the
1996 Indenture) among the Company, Nortel Networks Capital Corporation
(NNCC) and The Bank of New York as trustee; (iii) the Indenture dated as of
December 15, 2000 (the




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Export Development Canada
January 14, 2005
Page 2 2000 Indenture) among the Company, NNCC and Deutsche Bank Trust Company Americas
as successor trustee to Citibank, N.A.; and (iv) the Indenture dated as of August 15,
2001 among Nortel Networks Corporation (NNC and together with the Company,
Nortel Networks), the Company as guarantor and Deutsche Bank Trust Company
Americas (formerly known as The Bankers Trust Company) as trustee (the 2001
Indenture and, together with the 1988 Indenture, the 1996 Indenture and the 2000
Indenture, the Nortel Indentures). We have advised you that (i) the Company and NNC did not file their Annual Reports on
Form 10-K for the year ended December 31, 2003 (the Annual Reports) with the
United States Securities and Exchange Commission (the SEC) by March 15, 2004, the
date by which such filings were required, and with the trustees under the Nortel Indentures
and with EDC under the EDC Facility by the date on which such filings were required
therein, (ii) the Company and NNC did not file their Quarterly Reports on Form 10-Q for the
quarter ended March 31, 2004 (the First Quarter Reports), with the SEC by May 10,
2004, the date by which such filings were required, and with the trustees under the Nortel
Indentures or with EDC under the EDC Facility by the date on which such filings were
required therein, (iii) the Company and NNC did not file their Quarterly Reports on Form
10-Q for the quarter ended June 30, 2004 (the Second Quarter Reports) with the
SEC by August 9, 2004, the date by which such filings were required, and with the trustees
under the Nortel Indentures or with EDC under the EDC Facility by the date on which such
filings were required therein, (iv) the Company and NNC did not file their Quarterly
Reports on Form 10-Q for the quarter ended September 30, 2004 (the Third Quarter
Reports and together with the First Quarter Reports and the Second Quarter Reports,
the Quarterly Reports) with the SEC by November 9, 2004, the date by which such
filings were required, and with the trustees under the Nortel Indentures or with EDC under
the EDC Facility by the date on which such filings were required therein (such failures to
timely file and deliver the Annual Reports and the Quarterly Reports, the Delayed
Filings), and (v) the Company, as a result of its re-examination of the
establishment, timing of, support for and release to income of certain accruals and
provisions in prior periods, announced the need to restate its previously filed financial
results for certain prior periods (the Restatements and together with the Delayed
Filings, the Events). Absent the waivers contained in the Letters, the Delayed Filings would have resulted
in the occurrence of an Event of Default and a Specified Event of Default under the EDC
Agreement pursuant to the cross-default provision contained in Section 6.1(f)(ii), and an
Event of Default under the provisions of Section 6.1(d) due to failure or potential failure
to comply with certain information covenants contained in the EDC Agreement. Section
6.1(f)(ii) of the EDC Agreement defines Event of Default and Specified Event of Default to




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Export Development Canada
January 14, 2005
Page 3 include the occurrence of any event that enables the holders of any Material Debt (which is
defined to include each series of the Companys outstanding debt securities) to
declare such Material Debt due and payable prior to its scheduled maturity (with or
without the giving of notice, the lapse of time or both). Section 6.1(d) of the EDC Agreement defines an Event of Default to include the failure
to observe or perform any covenant or agreement contained in any Facility Document,
including a failure to deliver the Annual Reports and the Quarterly Reports when required
by Sections 5.1(a) and (b), respectively, of the EDC Agreement, and a failure to deliver
the officers certificates required by Section 5.1(c) of the EDC Agreement, if any such
failure continues for thirty days after notice thereof is provided by EDC to the Company.
In addition, as a result of the circumstances giving rise to the Restatements, (x) the
Company may be in violation of Section 5.7 of the EDC Agreement and (y) the representations
and warranties contained in Sections 4.1(d)(i) of the EDC Agreement may have been incorrect
when made or when deemed made. The Company hereby requests that EDC waive the occurrence of any Event of Default or
Specified Event of Default resulting from (i) the Delayed Filings to the extent that such
Event of Default or Specified Event of Default arises under Sections 5.1(a), 5.1(b),
6.1(d), or 6.1(f)(ii) of the EDC Agreement; (ii) the failure to deliver an officers
certificate when required under Section 5.1(c) of the EDC Agreement to the extent that the
EDC Agreement requires such delivery at the time of delivery of the Annual Reports or any
of the Quarterly Reports, and (iii) the Events to the extent that such Event of Default or
Specified Event of Default arises under Sections 4.1(d)(i) or 5.7 of the EDC Agreement. We
refer to the waivers set forth above in this paragraph as the Waivers. The
Waivers will terminate on the earliest to occur of (A) the date on which Nortel Networks
has filed all of the Annual Reports and the Quarterly Reports with the SEC; (B) 11:59 pm
Eastern Time on February 15, 2005; or (C) for greater certainty, but without in any way
extending the limited waiver contained herein, the date on which any Material Debt becomes
due before its stated maturity. The Company hereby represents and warrants to EDC that as of the date hereof no
Default, Event of Default or Specified Event of Default, other than those specifically
waived herein, has occurred and is continuing under the EDC Agreement. In consideration of the Waivers by EDC herein, the Company hereby: (i) waives any
notice requirement under Section 6.1 (d) of the EDC Agreement with respect to any Event of
Default that would otherwise result from the Events but that is waived herein; (ii) agrees
that the proviso to the last sentence of Section 5.7 of the EDC Agreement shall not apply
as long as any of the Waivers remain in effect; and (iii) agrees that, notwithstanding the
provisions of




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Export Development Canada
January 14, 2005
Page 4 Section 2.1(a) of the EDC Agreement, until such time as all of the Waivers have terminated
and no Default or Event of Default exists under the EDC Agreement, any Support
(including without limitation any Support under the Small Bonds Facility) provided by
EDC under the EDC Agreement and under any EDC Support Agreement shall be provided on
an uncommitted basis and at the sole discretion of EDC, subject to such conditions
precedent as EDC may require, including without limitation those applicable to the
Receivables Bonding Facility and the General Support Facility. The EDC Agreement (as amended herein) and the Master Indemnity Agreement are and shall
continue to be in full force and effect and are hereby in all respects ratified and
confirmed. Except as otherwise expressly provided herein, the execution, delivery and
effectiveness of this letter agreement shall not operate as a waiver of any right, power or
remedy of EDC under the EDC Agreement or the Master Indemnity Agreement, nor does it or shall it constitute a
waiver of any provision of the EDC Agreement or the Master Indemnity Agreement or of any
Event of Default or Specified Event of Default (including without limitation any Event of
Default or Specified Event of Default arising from or related to the Restatements) other
than those expressly provided herein. This letter agreement shall be governed by and construed in accordance with the laws
of the Province of Ontario and the laws of Canada applicable therein.




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Export Development Canada
January 14, 2005
Page 5 Please indicate your agreement with the foregoing (including the Waivers) by having
the enclosed duplicate copy of this letter agreement executed in the space provided below
by duly authorized representatives of EDC and returned to us. NORTEL NETWORKS LIMITEDBy:
    /s/ Gordon A. DaviesName:
    Gordon A. DaviesTitle:
    Assistant General Counsel  Securitiesand
Corporate SecretaryBy:
    /s/ Katharine B. StevensonName:
    Katharine B. StevensonTitle:
    Treasurer Confirmed and Agreed: EXPORT DEVELOPMENT CANADABy:
    /s/ Yves LHeureuxName:
    Yves LHeureuxTitle:
    Senior Financial Services ManagerBy:
    /s/ David B. GuyName:
    David B. GuyTitle:
    Director, Telecom Team