Telecom is to spend almost $5 million to appease customers affected by another major fault on its XT mobile network.
The hardware fault, which occurred about 11am last Wednesday, initially affected tens of thousands of Telecom customers south of Taupo. Most had coverage restored that evening.
However, many customers in the lower South Island were still unable to place or receive calls on Friday. Service was restored late that evening.
It is the second time a major fault has knocked out large parts of the network south of Taupo since December last year.
Telecom chief executive Paul Reynolds and retail chief executive Alan Gordy made the compensation announcement at a news conference in Dunedin, one of the worst-affected areas.
Dr Reynolds apologised for the network failure on Tuesday, saying the situation appalled him and hoped customers would appreciate the company's gesture.
"Last week's outage should not have happened - it's unacceptable. And its effects were felt most severely here in Dunedin and in other parts of the region right down to Invercargill.
"And that's what I want to say sorry about - we let our customers down."
Dr Reynolds says there will be an independent review of the entire XT network and Telecom will replace or extend parts of it if necessary.
All possible steps are being taken to ensure the stability of the network and Telecom is determined to give customers a world-class network, he says.
Telecom says all affected XT customers from south of Taupo to the bottom of the South Island will receive credits to their accounts by the end of February.
Customers who lost service last Wednesday will get a $10 credit on their pre-paid accounts or a credit for one week's worth of plan charges.
XT customers who had problems for up to three days will get a $20 credit on their prepaid phones or two weeks' worth of plan charges.
Business customers will receive between two weeks and four weeks of free plan charges, including extras, due to what Telecom calls the severe disruption they suffered.
Telecom says it will also donate $250,000 to community projects in the lower South Island.
The Telecommunications Users Association says the compensation deal offered by Telecom is generous.
Chief executive Ernie Newman told Checkpoint Telecom cannot compensate its customers fully for their losses, but believes most will stay with the XT network.
"I think there's a general sense that it is a solid and robust network. Yes, it has had two major outages in a short period of time - and that's inexcusable - but there'll be no mobile operator in the world more motivated at the moment to keep its network online than Telecom New Zealand."
Mr Newman says the association wants independent oversight of Telecom's review process so it can be assured that the network will not fail again.