New Zealand's largest listed company said it planned to spend $130 million on a new national Internet Protocol (IP) network.
The network would bring voice, Internet and mobile telephony services together on to one integrated technology platform, group chief transformation officer Frank Mount said.
The contract ran to December 2009, by which time Telecom expected to be able to launch the first "proof of concept" products on the new network.
"Building this next generation network infrastructure is yet another example of the massive programme of transformation currently under way at Telecom," he said.
The new investment would complement other significant programmes of work, including fibre to the node, the mobile phone network upgrade, the next generation Telecom retail transformation and operational separation.
The development of an all-IP network was also a component of Telecom's undertakings on operational separation, he said.
Telecom shares were up 2c at $3.30 yesterday.
In Dunedin, the local fleet of about 80 Downer EDI Engineering telecommunications service vehicles have been repainted in the colours of Chorus - the Telecom business which operates the access network.
Chorus has more than 1700 field service vans throughout the country, with 2500 technicians doing jobs like installing new telephone and broadband lines, wire maintenance and repairs.
The Chorus network includes 130,000km of copper cable, 20,000km of fibre-optic cable, 670 telephone exchanges and 8800 roadside cabinets.
