Telecom may need to separate its network division Chorus from the rest of the company to become a key player in the Government's broadband fund.
The country's biggest telecommunications firm is locked out of being a majority shareholder in any of the regional investment companies that will be part of the $1.5 billion fund.
The Government will set up a Crown Fibre Investment Company, which will invest in joint ventures to develop a fibre optic network covering 25 towns and cities.
Telecom says it is assessing the broadband proposal in detail and will begin to prepare its submission to the Government.
Forsyth Barr senior analyst Guy Hallwright says the Government's plans seem designed to force control of the telecommunications network out of Telecom's hands.
Mr Hallwright says the Government's plan instead opens the door for utility companies, such as Vector, to play a critical role in the broadband fund.
He says Telecom would have hoped to play a bigger part, and one way round that would be to split its network division from the rest of the company.
