Bell Aliant establishes 2009 financial guidance and builds on solid fourth quarter 2008 results

    2009 plan to create more nimble, competitive and sustainable organization

    HALIFAX, Feb. 2 /CNW Telbec/ - Bell Aliant Regional Communications Income
Fund (Bell Aliant or the Fund)(1) (TSX: BA.UN) today announced its 2009
financial guidance(2), reflecting an expected increase in distributable cash
of between $35 million and $75 million, or up to 10 per cent over 2008.
    Bell Aliant expects to significantly improve cash flow generation by
implementing a more targeted approach to capital spending, resetting its cost
structure and increasing profitability.
    "Our 2009 business plan and new, more nimble organizational structure
that we announced in January builds on our strengths, and accelerates our
ability to deliver results in more competitive and sustainable ways," said
Karen Sheriff, President and Chief Executive Officer.
    "We are strengthening our customer relationships through service
improvements and enhancing the overall experience they have with us. As part
of our 2009 plan, despite a lower overall capital program, we plan to increase
our investment in broadband expansion and new services by over 20 per cent
from last year, benefiting customers and delivering growth in long term
revenue and profitability."
    The restructuring announced in January will result in the reduction of
approximately 500 management positions, representing about 15 per cent of
management or 5 per cent of the overall workforce. Bell Aliant recorded a $60
million charge in the fourth quarter of 2008 associated with the
restructuring. These changes are expected to provide annualized savings of
approximately $60 million.

    2009 Guidance

    Bell Aliant's financial guidance for 2009 is as follows:


                                         2009 Guidance
         Operating Revenue      $3,180 million - $3,280 million
         Capital Intensity(3)   13.5 per cent - 14.5 per cent
         Distributable Cash(4)    $750 million - $790 million

    Operating Revenue

    Consolidated operating revenue is expected to be between $3,180 million
and $3,280 million in 2009. Growth in Internet and wireless revenues is
expected to mitigate declines in local, long distance, and other revenues.
Information technology (IT) revenues are expected to be consistent with 2008
levels following strong revenue growth in 2008 which was largely driven by a
significant IT services project.

    Capital Intensity

    Capital expenditures are expected to be between 13.5 per cent and 14.5 per
cent of operating revenue in 2009 with the program directed to align with
strategic priorities, primarily growing broadband. Although overall capital
intensity is expected to be lower than the 16.1 per cent level of 2008, the
2009 capital plan includes an increase of over 20 per cent for broadband
expansion and new services spending. The prioritization of profitability
growth and productivity, without significant information technology
investment, is expected to be a key driver for declining capital expenditure
levels from 2008.

    Distributable Cash

    Distributable cash is expected to increase by up to 10 per cent in 2009 to
between $750 million and $790 million, up from $716 million in 2008, as a
result of reduced capital expenditures and improved operating performance
achieved through restructuring and on-going productivity initiatives.
    The distribution to unitholders per unit remains unchanged at $0.2417 per
month or $2.90 per year. Bell Aliant believes it prudent to maintain its
liquidity and financial flexibility considering current credit market

    Fourth Quarter 2008 Results

    "Our fourth quarter results are solid and well in line with our
expectations said Ms. Sheriff. "I am especially pleased that we ended the year
with our distributable cash at the high end of our expectations. With this
solid financial performance in 2008, and the traction we have already gained
on our 2009 plan, I am optimistic about Bell Aliant's future."

    Bell Aliant Holdings LP's fourth quarter financial highlights(5)(6)(7)
    are as follows:

                                          Per-                          Per-
    (In millions       Q4        Q4   centage                       centage
     of dollars)     2008      2007    Change        2008     2007   Change
     Revenue         $813      $819      (0.7%)    $3,282   $3,253      0.9%
    EBITDA(8)         366       366       0.0%      1,451    1,438      0.9%
     Expenditures     167       144      16.6%        529      542     (2.4%)
     Cash             146       170     (13.7%)       716      701      2.0%

    Highlights of the fourth quarter of 2008 include the following:

    - EBITDA in the quarter was unchanged from the same quarter a year
      earlier. EBITDA margin(9) improved to 45.0 per cent, up from 44.6 per
      cent from the same quarter in 2007, with productivity improvements
      offsetting the effects of revenue declines and lower revenue margins.
    - Internet revenue grew by $12 million (13.0 per cent) in the fourth
      quarter of 2008 compared to the same period in 2007. High-speed
      Internet subscriber growth was 10.7 per cent and residential high-speed
      average revenue per customer (ARPC) grew by 6.7 per cent over the same
      quarter in 2007. Other data revenues grew by $5 million (4.4 per cent)
      from the same quarter in 2007, with growth in data products and IP
    - IT revenue was essentially flat in the quarter compared to the same
      period last year. IT equipment sales in the fourth quarter of 2008
      declined when compared to an unusually strong sales quarter in 2007 but
      the decline was offset by increases in services revenue.
    - Local service and long distance revenue declined by $4 million
      (1.2 per cent) and $7 million (5.7 per cent), respectively, in the
      fourth quarter of 2008 compared to the fourth quarter in 2007, with
      network access services (NAS) 3.4 per cent lower than a year ago. NAS
      declines in the quarter improved 0.75 per cent to 41,964, down from
      42,282 in the same quarter of 2007.
    - Capital expenditures in the fourth quarter were $167 million, up
      $24 million (16.6 per cent) from the same quarter a year ago, driven
      mainly by the previously announced network enhancements in support of
      the evolution of Bell Mobility's national wireless network. Annual
      capital intensity was 16.1 per cent.
    - Distributable cash decreased $23 million (13.7 per cent) in the fourth
      quarter of 2008 from the same period in 2007, driven by the
      concentration of capital expenditures in the fourth quarter compared to
      the same period a year ago. Distributable cash for the year increased
      $14 million (2.0 per cent) over 2007, mainly as a result of lower
      annual capital spending and improved EBITDA in 2008, which offset the
      loss of distributable cash generated from discontinued operations in

    The Fund reported distributions to its unitholders of $92 million or
$0.725 per unit for the quarter ended December 31, 2008.

    Analyst conference call

    A conference call with the financial community is scheduled for Tuesday,
February 3, 2009 at 9:30 a.m. (Eastern). The dial-in numbers are (866)
299-6657 or (416) 641-6121 for Toronto area participants. Media are invited to
attend in a listen-only mode. The title of the call is "Bell Aliant Fourth
Quarter 2008 Financial Results." A replay of the session can be heard from
February 3 to February 17, 2009. To access the replay, dial (800) 408-3053 or
(416) 695-5800 and enter the passcode 3279208#.
    A live audio webcast of the conference call can be accessed on under the Investor Relations section. A replay of the
conference call will be available on the website for one year.

    Forward-looking Information

    This news release contains forward-looking statements concerning
anticipated future events, results, circumstances or expectations, in
particular as described in the "2009 Guidance" section of this news release.
Unless otherwise indicated, such forward-looking statements describe
management's expectations at February 2, 2009. These statements are based on
management's beliefs regarding future events, many of which, by their nature
are inherently uncertain and beyond management's control. These statements are
not guarantees of future performance and are subject to assumptions which may
prove to be inaccurate and numerous risks and uncertainties which are
difficult to predict.


    Several assumptions were made in the preparation of Bell Aliant's 2009
financial guidance and in making forward-looking statements in this news
release, such as economic assumptions, market assumptions, and financial
assumptions. The material factors and assumptions used to develop this
forward-looking information include:

    (a) Economic Assumptions

    - Canadian GDP growth will be essentially flat, ranging from -0.5 to +0.5
      per cent for 2009, consistent with recent estimates from the Conference
      Board of Canada and the Bank of Canada;
    - Inflation rates will be lower than those experienced in 2008, in the
      range of 1.0 to 1.5 per cent for 2009; and
    - Interest rates will remain fairly stable, as represented by:

        - Government of Canada 3 to 5-year bond yields of 1.5 to 3.0 per
        - Banker's acceptances rates of 1.5 to 3.0 per cent; and
          Credit spreads on bonds for corporate issuers like Bell Aliant LP
          of 4.0 to 5.0 per cent.

    (b) Market Assumptions

    - Households passed with a competitive cable telephony offering will
      increase at the same rate Bell Aliant has experienced in recent
    - Bell Aliant will increase the number of households passed in its
      territory with high-speed Internet;
    - Bell Aliant will invest in extending its fibre network to pass
      additional households in its territory;
    - Residential competitive losses in local and long-distance services will
      continue at approximately the same level as experienced in 2008;
    - Business competitive losses will increase with expansion of competitive
      territory, loss of some government contracts and a slowing economy;
    - Internet revenue growth will be similar to that experienced in 2008
      given slowing growth in high-speed penetration rates, offset by higher
      average revenues per customer and accelerated growth in revenue from
      IPTV services; and
    - IT revenue will be stable with 2008 levels.

    (c) Financial Assumptions

    - Operating revenue will be in the range of $3,180 million to $3,280
    - Capital spending will be in the range of 13.5 to 14.5 per cent of
      operating revenue, down from 16.1 per cent in 2008;
    - Distributable cash will be in the range of $750 million to
      $790 million, up from $716 million in 2008; and
    - Pension deficit funding will be in the range of $90 to $110 million
      based on estimated values of plan deficits at December 31, 2008,
      assumed adoption of 10-year solvency funding rules for Bell Aliant's
      federally regulated plans and the application of an incremental
      40 basis point spread on discount rates for commuted values of pensions
      as permitted by the Actuarial Standards Board. Solvency funding relief
      measures announced, without specific details, in the January 27, 2009,
      Economic Action Plan tabled by the federal Minister of Finance are also
      assumed to be implemented for 2008 valuations.

    Bell Aliant encourages investors to review the risk factors section below,
and related disclosures, for a discussion of the various factors that could
cause actual results to differ from what is currently expected.

    Risk Factors

    There are many factors that could cause results or events to differ
materially from current expectations. The most significant factors that Bell
Aliant has identified that may affect results in 2009 include but are not
limited to: management's ability to achieve strategies and plans; general
economic conditions; increasing competition; changing regulations; reliance on
systems; changing technology; required operating and capital expenditures;
demand for services; achievement of productivity targets; the relationship
with BCE and Bell Canada and the allocation of business opportunities; pension
plan funding; liquidity and financing risk; leverage and restrictive
covenants; BCE governance rights; reliance on key personnel and labour
relations; legal contingencies and changes in laws; unpredictability and
volatility of unit price; the nature of Fund units; limitations on
non-resident ownership; dilution through issuance of additional units; and
changing taxation rules for income trusts. For a detailed discussion of these
risk factors and how they could impact our results, please refer to the "Risk
management" sections of the Fund's and Bell Aliant Holdings LP's 2007 annual
Management's discussion and analysis (MD&A), as updated by their 2008
quarterly MD&As, as well as the "Risk Factors" sections of their 2007 Annual
Information Forms, and their Notice Concerning Forward-Looking Information
dated February 5, 2008. These documents are available at
    Should any factor impact Bell Aliant in an unexpected manner, or should
assumptions underlying the forward-looking statements prove incorrect, the
actual results or events may differ materially from the results or events
predicted. All of the forward-looking statements made in this press release
are qualified by these cautionary statements, and there can be no assurance
that the results or developments anticipated by Bell Aliant will be realized
or, even if substantially realized, that they will have the expected
consequences for Bell Aliant.
    Except as may be required by Canadian securities laws, Bell Aliant
disclaims any intention and assume no obligation to update or revise any
forward-looking statement even if new information becomes available, as a
result of future events or for any other reason. Readers should not place
undue reliance on any forward-looking statements. Forward-looking statements
are provided for the purpose of providing information about management's
current expectations and plans relating to fiscal 2009. Readers are cautioned
that such information may not be appropriate for other purposes.

    About Bell Aliant

    Bell Aliant (TSX: BA.UN) is one of North America's largest regional
communications providers. Through its operating entities it serves customers
in six Canadian provinces with innovative information, communication and
technology services including voice, data, Internet, video and value-added
business solutions. Through its xwave offices, Bell Aliant also provides IT
professional services in Canada and the US. Bell Aliant's employees are
committed to deliver the highest quality of customer service, choice and

    (1) Bell Aliant derives virtually all of its income from its indirect
        ownership in Bell Aliant Regional Communications Holdings, Limited
        Partnership (Bell Aliant Holdings LP). Bell Aliant Holdings LP's
        results combine the results of Bell Aliant Regional Communications,
        Limited Partnership (Bell Aliant LP), Télébec, Limited Partnership
        (Télébec) and NorthernTel, Limited Partnership (NorthernTel).
    (2) Refer to the section entitled "Forward-looking Information" later in
        this news release for a discussion concerning the material risk
        factors that could affect, and the material assumptions underlying,
        Bell Aliant's 2009 financial guidance.
    (3) Bell Aliant defines capital intensity as capital expenditures as a
        percentage of operating revenue.
    (4) Bell Aliant defines distributable cash, a non-GAAP measure, as cash
        from operating activities of continuing and discontinued operations
        and of the Fund, plus operating items funded through cash reserves or
        borrowings, such as working capital, pension deficit funding,
        restructuring and other charges and cash capital taxes in excess of
        normalized levels, plus amounts for current income tax provisions
        plus other elements of working capital changes that do not affect
        cash flow, less capital expenditures.
    (5) On February 1, 2008, Bell Aliant Holdings LP completed the
        acquisition of the assets and operations of Kenora Municipal
        Telephone System (KMTS). Bell Aliant Holdings LP's financial results
        and subscriber metrics include KMTS data from that date onward.
    (6) In the second and third quarters of 2008, Bell Aliant adopted
        discontinued operations presentation for its Atlantic Mobility
        Products Limited Partnership and its Defence, Security and Aerospace
        businesses, respectively. Prior period information has been
        reclassified to reflect these changes.
    (7) Percentage changes quoted in this release are based on numbers
        rounded to the nearest hundred-thousand dollars, consistent with
        disclosure in the Fund's and Bell Aliant Holdings LP's management's
        discussion and analysis and supplementary information package. Dollar
        values quoted in this release are rounded to the nearest million
        unless otherwise stated.
    (8) Bell Aliant defines EBITDA, a non-GAAP measure, as operating revenue
        less expenses (earnings) before interest, income taxes, depreciation
        and amortization expense, net benefit plans cost, and restructuring
        and other charges.
    (9) Bell Aliant defines EBITDA margin as EBITDA as a percentage of
        operating revenue.

For further information:

For further information: Media Relations: Kelly Gallant, (866) 762-6540,; Investor Relations: Zeda Redden, (877) 487-5726,

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