A United States-based private investment firm with a shareholding of about 3% in Telecom is nominating two candidates to stand for election as directors of the company.
Elliot International spokesman James Smith said the firm wanted two local and independent candidates to provide new thinking and new ideas regarding the future strategic direction of the company.
Elliot had nominated Mark Tume, who had banking and funds management experience, and Mark Cross, who had a global financial markets background, specialising in utilities.
"For almost a year we have been trying to talk to Telecom about some of our ideas and concerns regarding the affairs of the company.
Telecom's share price has been in decline over the past few years and, once again, following disappointing year-end results, the share price is around a 15-year low.
"In our view, Telecom's performance languishes behind that of other key telecommunications players in the international market and we believe this is partly due to an unclear and outdated strategy."
Shareholders and customers remained dissatisfied with Telecom's progress, Mr Smith, a portfolio manager with Elliot, said.
Telecom on Friday reported a reduced profit for the year ended June 30.
Earnings before interest, tax, depreciation and amortisation fell 4% to $1.89 billion and net earnings fell 17% to $713 million.
ABN Amro Craigs broker Chris Timms said Elliot faced a tough job to get the new directors elected at the annual meeting on October 2.
"They only have 3% and will need the support and clout of large shareholders to be successful. If they can't get the support of institutions, they have no show."
At the operating level, Telecom's annual result was broadly in line with guidance and forecasts.
The new information was largely negative for sentiment.
It included a weaker mobile performance than anticipated but that was partially offset by Telecom signalling an early W-850 deployment to improve its competitive position in mobile, he said.
Mr Smith said Telecom needed to take immediate and serious "action" to improve the situation and to consider and debate new ideas that would benefit customers and shareholders.
Elliot had asked Telecom to consider structural separation as the next logical step in the operational separation process that Telecom began earlier this year.
That idea involved a structural split of Telecom's retail business from the remaining wholesale and network business of Telecom.
Market analysts said splitting the company further would make it easier for rivals, such as Telstra, to take over selected parts.
Telecom chairman Wayne Boyd said the board welcomed the interest of shareholders in Telecom's strategy.
"We have met with Elliott International, a US hedge fund, on several occasions over the last 12 months to discuss their views on Telecom's strategic direction, including the implications of structural separation.
"Telecom has carefully considered the implications of structural separation, and does not believe that separating our retail and network businesses would be in the best interest of shareholders at this time."
The board believed the company had the management team, strategy and financial expertise to maximise long-term shareholder value.
