The opening shots have been fired in what could become a battle over the future shape of Telecom, the largest company listed on the New Zealand stock exchange.
A disgruntled investor is putting up two candidates for election to Telecom's board, after seeing the phone company's shares fall sharply following last week's reduced profit announcement.
American-owned Elliott International, which has a 3% stake in Telecom, says the company's declining share price is partly due to an unclear and outdated strategy.
It wants to split Telecom into two seperate companies - one running the retail business, and the other looking after the network and wholesale divisions.
Elliott says it has been talking unsuccessfully with Telecom on this and other ideas for more than a year.
The investor has named professional director Mark Tume and former Deutsche Bank senior manager Mark Cross as its nominations to become independent directors on Telecom's board.
Telecom chairman Wayne Board has rejected the proposal to split. Mr Boyd says the board has met with the hedge fund several times in the last year but doesn't believe splitting Telecom would be in the best interests of shareholders at this time.
At midday on Monday, Telecom shares had recovered by 7 cents to $3.47, in a session which has been categorised by a wide-ranging lift in the market.
Telecom made $713 million in the year to June, down 26% on the previous year, and it warned last week that this year's profit could fall by as much as 30% because of stiffer competition.
Chief executive Paul Reynolds says its guidance is unlikely to change because the economic downturn has not yet hit its margins enough for it to change its outlook for the year.
Investors in the country's biggest listed company reacted badly to the news, pushing down Telecom's shares 28c to $3.40 at the close on Friday. The fall wiped $500 million off the value of the company.
Mr Reynolds says some of the higher costs were the result of restructuring, under which the company has been split into wholesale, retail and networks businesses.
In the final quarter of the year, Telecom picked up more than half of all new broadband internet connections, with internet revenue for the three months 6% higher than a year ago. However, mobile phone revenue fell due to tougher competition and the cutting of prices.
Telecom will pay an 8c dividend for the quarter, taking its payout for the year to 29c a share.