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Bell Aliant Regional Communications Income Fund's (OTC:BLIAF) fourth quarter results are getting a rise out of investors, but while the stock has climbed 4% higher in the past two days, analysts remain lukewarm on the near term prospects for the company.

Front and centre among their concerns is the company's pension obligations, which continue to put a strain on the company distribution, despite Bell Aliant's guidance for lower capex spending this year.

UBS analyst Jeffrey Fan maintained his "neutral" rating and C$23 price target noting that management projects total pension funding of C$162-million to C$182-million, well above his expectation of C$143-million.

He said in a note to clients:

As expected, due to the higher pension funding, even with lower capex, BA will be distributing more than it will generate after capex and pensions. While the yield is currently attractive [at 12%], it reflects the increasingly higher perceived risk of the distribution.

Beacon Securities analyst Michael Mills reiterated his "hold" rating and C$26.50 price target. Based on Bell Aliant's decision to lower its capex from 16.5% of revenue to a range of 13.5% to 14.5% and recent downsizing that included the elimination of 500 positions, he is slightly more confident in the sustainability of the distribution.

He said in a research note:

We believe the announced job cuts, coupled with reduced capex plans in 2009, provide BA more financial flexibility. While the growing pension shortfall is a concern, we are now less concerned with the ability to sustain the current distribution through the end of 2010.

Source: Analysts Lukewarm on Bell Aliant