Telstra says revenues at its New Zealand operation, TelstraClear, fell by 0.7% to $NZ666 million in the year ending June.
The business made a loss of $NZ8 million, compared to a loss of $NZ9 million the previous year, in what is described as a difficult economic environment.
Stripping out inter-company revenues, TelstraClear's total income fell by 1.4% to $NZ693 million and earnings fell 11% to $NZ16 million.
Customer revenues increased by 8%, but Telstra says it has faced a challenging business market which offset growth in its consumer business.
TelstraClear reduced its operating expenses by just over 1% in the year, though it had seen an increase in bad and doubtful debts due to the economic climate.
Capital expenditure fell by 8% to $NZ88 million, with investments focussed on delivering higher speeds on its network in Wellington and Christchurch.
Overall, Telstra reported a 4.7% fall in full-year after tax profit to $A3.8 billion, driven by declining fixed line earnings and an asset writedown.