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With the loss of Bell Canada's business, Bell Aliant Regional Communication Income Fund (TSX: BA.UN) will reassess the future of Atlantic Mobility Products.

Bell Aliant took an $11.2-million non-cash writedown in the first quarter of this year for the goodwill on AMP after Bell Canada, Bell Aliant's biggest unitholder, announced that it will no longer use AMP as its exclusive distributor of mobility handsets in Atlantic Canada after July.

"Since Bell Canada is a major customer of AMP, we expect the loss of exclusivity agreement to have a material effect on AMP's future revenues," Bell Aliant chief financial officer Glen LeBlanc told business analysts in a conference call Wednesday on the first quarter results.

"We have written off all of AMP's goodwill, a non-cash charge of $11.2 million in the quarter."

"We are developing a transition plan and continue to assess AMP's prospects; however, regardless of the outcome, the effect on Bell Aliant's cash flow is expected to be minimal," he said.

AMP generates $100 million in annual revenue for Bell Aliant, but less than $2 million goes back to unitholders as "distributable cash," LeBlanc said. He described it as a "low-margin" business.

Most, but not all, of AMP's business comes from Bell Canada, said Bell Aliant's president and chief executive officer Stephen Wetmore.

Bell Canada wants to integrate distribution of its mobility products nationally, but does not plan to acquire AMP from Bell Aliant, he said.

Wetmore, answering a question in the telephone conference, said the loss of Bell Canada as a customer does not prevent Bell Aliant from selling wireless services. He said Bell Aliant provides bundled products now for Bell Mobility.

Bell Aliant unitholders other than Bell Canada might question the news about AMP, says Eamon Hoey of Toronto, senior partner at Hoey Associates management consultants.

Hoey, who did not take part in the conference call, asked in an interview whether the parties dealt at arms length in these negotiations, since Bell Canada owns 44 per cent of Bell Aliant. He questions whether the arrangement serves the interests of the owners of the other 56 per cent of the units.

Analysts also asked how Bell Aliant will deal with changes in tax rules for income trusts in 2011.

Under the new rules, Bell Aliant would face federal and provincial income taxes amounting to about 25-30 per cent, said Wetmore.

Bell Aliant intends to remit 90 per cent of distributable cash to unitholders. Eventually Bell Aliant will have to lower distributions, Wetmore said.

Projected loss carry-forwards, currently $640 million, might push the day of reckoning to 2012, he said.

The analysts wanted to know whether Bell Aliant would focus on high dividends or growth under the new rules.

It did not surprise Hoey that Wetmore did not commit himself completely, with a decision pending on the Ontario Teachers Pension Plan attempt to buy Bell Canada outright.

The new owners might, or might not, reclaim Bell Canada's rural assets, leaving Bell Aliant an East Coast telephone company. Bell Canada might sell its stake in Bell Aliant, with or without its assets in Quebec and Ontario - or, it might buy out the other 56 per cent of the Bell Aliant units.

These outcomes would affect strategies for dealing with the changing tax rules, he said.

Bell Aliant units closed at $30.01 on the Toronto Stock Exchange on Wednesday, down 36 cents or 1.19 per cent on trading volume of 140,499 units.