The Australian company installing fibre optic cable for ultrafast broadband in Christchurch has confirmed it won't be giving any further work to eight sub-contracting companies to dig the trenching.
Transfield Services says it no longer has about a year's worth of work for eight drilling and earthmoving companies.
Transfield Services says the offer of work from June last year until June this year was only ever made via email, rather than a legally-binding contract.
A spokesperson, David Jamieson, says the company has made a commercial decision to cut costs by doing the work itself, using its own staff.
Transfield Services was last week accused of being behind in hundreds of thousands of dollars of payments to dozens of companies.
It says all outstanding payments have now been made.
Prime Minister John Key says he is confident New Zealanders will still get ultra fast broadband by by June 2014.
Canterbury Employers Chamber of Commerce chief executive Peter Townsend says it also appears to be meeting budget but agrees it is tough news for the contractors involved.