Telecommunications Users Association chief executive Ernie Newman said the series of visible setbacks Telecom was suffering must not be allowed to obscure the fact the company was the cornerstone of New Zealand's telecommunications infrastructure.
"The association expects it to retain that role into the long-term future," Mr Newman said.
It wanted "sensible management" of the complex issues around the transition from Telecom's copper wire network to the Government-subsidised fibre-optics - "with Telecom working as part of a wider government-industry partnership".
Telecom chief executive Paul Reynolds indicated the company was willing to consider the possibility of splitting its retail and network arms to enable it to take part fully in the Government's ultra-fast broadband plans.
Mr Newman said that if structural separation would clear obstacles to such a partner, that would benefit both Telecom and the nation.
It would also remove a significant burden of cost and complexity from both Telecom and the Government in the form of compliance and monitoring of the operational separation regime.
"This is too small a country, and the benefits of the ultra-fast broadband age are too important, for Telecom and the Government to be working in anything other than harmony."
Mr Newman urged Telecom to keep voluntary structural separation under active consideration.
Dr Reynolds said the company was open to working with the Government on a full range of approaches to the ultra-fast broadband initiative.
Telecom was unable to become a full partner in the $1.5 billion plan to introduce ultra-fast broadband to three-quarters of homes unless it separated its retail and network business.
Dr Reynolds said Telecom would consider anything.
"There's a whole range of potential options - from internal delivery to new structures and new companies. The board is very open-minded. We have no dogma. We're not precluding anything," he said.
Reuters reported Telecom was auctioning off its Australian-based AAPT arm with four bidders vying for the struggling unit.
The four bidders which submitted proposals by the deadline were TPG Telecom, privately held Pacnet, private equity firm Quadrangle Group and Optus, the fully owned Australian arm of Singapore Telecommunications, a source, speaking on the condition of anonymity, said.
AAPT has been suffering from declining business with revenue dropping to $A760 million ($NZ1 billion) in 2009 from $A1 billion in 2008, and operating profit dropping to $A73 million from more than $A100 million over that period.
Telecom said it would consider any reasonable offer for AAPT that was in the interest of shareholders.
