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Bell Aliant has no plans sell off its Xwave and Innovatia subsidiaries following the sale of a specialized defence group to an international aerospace firm.

"Xwave plays an important role in the (information and communications technology) area for Bell Aliant and we've said from the very beginning that we want to make it more efficient, which we did in 2007 and where it could really benefit Bell Aliant overall," said Stephen Wetmore, Bell Aliant's chief executive officer of Bell Aliant Regional Communications Income Fund (TSX: BA.UN) during a conference call with investors.

"Xwave had another very strong quarter with revenue growth of $23 million or 36.1 per cent over the same period in 2007," said Wetmore. "Along with revenue growth, profitability continues to improve in our xwave business, driven by the restructuring we implemented in 2007."

Xwave accounted for $87 million of the $823 million in gross revenue Bell Aliant posted in the second quarter of 2008. During the same period, Aliant saw a decline in local service and long distance, which fell by 2.4 per cent and 4.8 per cent respectively.

Alyson Queen, spokeswoman for Bell Aliant said after the conference call that both Xwave and Innovatia remain important parts of Bell Aliant.

Late Tuesday pilot trainer CAE Inc. (TSX: CAE) announced a deal to buy the defence, security and aerospace unit of xwave for $26.1 million.

Wetmore described defence, security and aerospace branch as specialized businesses that Aliant acquired in 2000 and 2001. After a strategic review Aliant decided that this division would be better of in a larger firm that was interested in pursuing business opportunities across North America and worldwide.

Bell Aliant operates phone and Internet services throughout parts of Ontario, Quebec and Atlantic Canada. It is one of North America's largest regional communications providers, with 10,000 employees.

Bell Aliant is 73.5 per cent owned by Canada's largest telecom group, BCE Inc. (TSX: BCE).

Xwave has roughly 1,500 employees and posted revenues of about $300 million in 2007. Xwave plans, designs, builds and operates complete information and communications technology solutions for businesses.

Innovatia provides knowledge management and e-learning solutions to businesses.

Innovatia employs more than 300 people globally and serves over 1,500 customers in 29 countries around the world from offices in Canada, the United States and Europe.

The sale of the defence, security and aerospace division to CAE comes as Bell Aliant faces increasing competition in its service areas.

Cable-based telephone services are now available in 54 per cent of Aliant's territory, up from 42 per cent in the same period last year and up three per cent from the first quarter of 2008.

"It will be more important than ever to execute on our strategy to focus on the individual communities we serve by tailoring our offerings and strengthening our brand presence," said Wetmore.

"Our footprint could be between 60 and 65 per cent competitive by the end of the year if the markets open as they could."

One way Bell Aliant may become more competitive with cable rivals Rogers Communications Inc. and EastLink would be the introduction of high-definition television services to its Internet Protocol Television (IPTV) service.

"HD is coming," said Wetmore. "In the coming quarters we will have additions to our pay-per-view line-up and the introduction of high definition and (personal video recorders)."