Telecom New Zealand does the splits

The move comes some eight weeks after the New Zealand government unveiled a significant package of reforms designed to promote competition and boost the uptake of broadband services.

It also comes as the Australian government last week approved Telstra's plans for mandatory separation of its own wholesale and retails arms.

Announcing the plans in a statement sent to the Australian Stock Exchange this afternoon, incoming Telecom chairman Wayne Boyd said the move would centre on "transparent, non-discriminatory arrangements" for regulated services to all customers.

In recent years, incumbent telcos have come under criticism for providing more favourable terms to their own retail arms than external customers of their wholesale services.

Boyd said Telecom had looked at similar efforts internationally, including examples from the UK's British Telecom and Telstra.

"The planned separation structurally reinforces the wholesale charter which we've been working through with wholesale customers for the past few months," he said.

"On that path we've also suggested industry user groups to work on the specifications and implementation plans of the new services."

Boyd emphasised when the separation was complete, an "independent wholesale unit" operating according to a number of firm working principles would exist.

Key principles would include equivalent service delivery processes and levels for all customers, transparent external reporting of information and oversight by an independent monitoring group which would include industry and stakeholder representatives.

In the statement, Telecom CEO Theresa Gattung said the changed regulatory environment had stimulated her company to work on many fronts to meet new government expectations.

"Today we are talking about wholesale but across Telecom there is massive work going on to introduce our new business model," she said.

"We are working on smoothly converged services across fixed and mobile, and a suite of Internet Protocol services that will enable the delivery of more content, services and features such as IP-based voice services."

Gattung said Telecom would update the market on its strategy during its full year results on 4 August.