TelstraClear has already put its equipment into the Dunedin Central exchange, and it is currently installing equipment in the Dunedin South exchange.
The total cost of the project is thought to be about $25 million.
The company's head of consumer markets, Steve Jackson, told the Otago Daily Times TelstraClear had almost doubled the size of its network through its local loop unbundling (LLU) programme.
It was now selling services from 42 exchanges - 23 in Auckland and 19 in other centres.
A further 20 exchanges would be live by the end of November.
The unbundling programme was the single biggest infrastructure project TelstraClear had undertaken in recent years, and it opened access to more than 220,000 homes and businesses as of this week.
It had involved building new automated billing and and installation systems and redesigning the entire consumer product offering, he said.
More than 80,000 hours had been logged, with more than 200 TelstraClear staff working on the project.
The work in Dunedin extended what TelstraClear had already developed in Wellington and Christchurch, Mr Jackson said.
Some fibre from the former Clear Communications was being used in Dunedin, but that was aimed mainly at businesses in the central business district.
The new unbundling programme targeted homes.
The new automated ordering process meant there was no longer the need to deal with third parties.
As a result, installation time - defined as the time a customer placed an order to the time the service was installed and activated - was down to five working days from 27 days previously, he said.
TelstraClear had released a new suite of pricing plans on the back of unbundling, starting at between $79 and $84 for a basic phone and broadband package.
Broadband speeds would not be "throttled" at peak times.
The move by Telstra comes more than a year after competitors Vodafone and Orcon took advantage of law changes that opened access to Telecom's exchanges.
Vodafone last year unbundled exchanges in Auckland to create its "Red Network", signing up phone and internet company Slingshot as a wholesale customer.
Mr Jackson said TelstraClear was the only telecommunications company undertaking the unbundling programme outside of Auckland, Wellington and Christchurch.
