DBRS Confirms Bell Nordiq at STA-2 (high)

Dominion Bond Rating Service (“DBRS”) has today confirmed the rating of the Bell Nordiq Income Fund (“Bell Nordiq” or the “Company”) at STA-2 (high). The stability rating remains quite solid at the STA-2 (high) category attributable to: (1) strong and stable operating results for a Canadian telecommunications provider; along with (2) an above-average financial profile with moderate debt levels and ample financial flexibility to meet its current distributions. In addition, the Company continues to benefit from dominant market positions within its rural operating territory, solidified by its strategic relationship with Bell Canada.

However, DBRS notes that the rating still remains limited to the STA-2 category related to: (1) the capex- intensive nature of telecom operations and changes in technology; (2) a lack of diversification relating to geography and being in lower economic growth regions, with a high dependence on cyclical resource companies as major employers; and (3) limited revenue growth potential in its current configuration due to its dominant market positions.

DBRS does acknowledge that the Company could make acquisitions in the near term relating to wireline and cable assets in contiguous areas, either from small independent operators or larger communications providers. Therefore, the potential exists for raising the growth and diversification prospects of Bell Nordiq through an acquisition, while maintaining an above-average financial profile. It is DBRS’s expectation that Bell Nordiq would still maintain a moderate capital structure if it were to make any acquisitions.

In terms of current operating results, revenue growth has been driven by increased wireless and high- speed Internet subscribers, offsetting long distance declines and the rationalization of the information services segment. With continued expense focus, the Company has been able to keep its EBITDA margins above 50%, which DBRS believes will be able to be maintained for the near term, even with increased competition. The financial profile has further improved over the past year at the Télébec Limited Partnership and NorthernTel Limited Partnership partnership levels, with liquidity and coverage ratios strengthening as debt levels have continued to decrease modestly. In addition, recent refinancing of public debt should help decrease future interest expense by almost Cdn$1 million annually, which should help maintain strong financial metrics.

As a result of the above, cash flow from operations increased modestly during the past 12 months to a DBRS-defined Cdn$171.3 million. With capex remaining relatively flat at around Cdn$49 million, the underlying Partnership trust units generate Cdn$1.38 per unit of cash available for distribution, which provides ample protection for the current annual distributions of Cdn$1.07 per income fund unit. The remaining free cash flow has resulted in the cumulative reserve increasing to approximately Cdn$47 million, which adds additional future distribution protection. DBRS expects that Bell Nordiq will continue to generate free cash flow for 2005, and thus maintain the currently level of stability protection relating to its distributions.