Verizon, created from the recently announced combination of Bell Atlantic and Vodafone's U.S. mobile phone networks, plans to purchase both wireless equipment and optical networking gear from Nortel. The deal offers further evidence that Nortel's wireless business is gaining steam after a sales setback last year.
Verizon said it plans to invest more than $3 billion this year to upgrade and expand its wireless network in the United States.
Nortel announced a deal with AT&T's wireless division in December of last year that could be worth as much as $600 million over three years. It also struck a separate deal recently with Vodafone AirTouch.
Nortel experienced a shortfall in its wireless equipment sales last year, based largely on sluggish Latin American launches of wireless networks.
Nortel executives said the deal represents a first for the company because it had previously not been a supplier to Bell Atlantic's wireless division.