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Exhibit 99.2 Nortel Networks Limited
8200 Dixie Road, Suite 100
Brampton, Ontario, Canada L6T 5P6
    
    (NORTEL LOGO)
 September 29, 2004 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 dated as of March 29, 2004 (the March 29 Letter), by and
between the Company and EDC, as further amended by that certain letter
agreement dated as of May 28, 2004 (the May 28 Letter), by and between
the Company and EDC, and as further amended by that certain letter
agreement dated as of August 20, 2004 (the August 20 Letter, and
together with the March 29 Letter and the May 28 Letter, the Letters),
by and between the Company and EDC. 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
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).




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Export Development Canada
September 29, 2004
Page 2 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 and, together with the First Quarter Reports, the
Quarterly 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; (such failures to timely file and deliver
the Annual Reports, the First Quarter Reports and the Second Quarter
Reports, the Delayed Filings); and (iv) the Company has announced that
it will need to restate its previously filed financial results for
certain prior periods (the Restatements and together with the Delayed
Filings, the Events) as a result of the work done to date by the
independent review undertaken by the Nortel Networks Audit Committee. The Delayed Filings would have resulted, absent the waivers
contained in the Letters, 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 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




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Export Development Canada
September 29, 2004
Page 3 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 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 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. The waivers contained herein will terminate on the Termination Date.
The Termination Date means the earliest to occur of (A) the date on
which Nortel Networks has filed all of the Annual Reports, the First
Quarter Reports and the Second Quarter Reports with the SEC; (B) 11:59 pm
Eastern Time on October 31, 2004; 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 the waivers contained herein are in effect, and
(iii) agrees that, notwithstanding the provisions of Section 2.1(a) of
the EDC Agreement, until such time as the waivers contained herein 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




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Export Development Canada
September 29, 2004
Page 4 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. 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/ G.A. DaviesName:
Title:
    
    Gordon A. Davies
Assistant SecretaryBy:
    
    /s/ K.B. StevensonName:
Title:
    
    Katharine B. Stevenson
Treasurer
 Confirmed and Agreed: EXPORT DEVELOPMENT CANADA By: /s/ Yves LHeureux 
 By: /s/ David B. Guy