Wellington, Aug 20 NZPA - Telecom boss Paul Reynolds stepped up his attack on industry regulation today, as he reported his company had halted its significant earnings declines of the previous two years.

Telecom has proposed it be split into two companies so it can be involved in plans for a national fibre network providing ultra-fast broadband, on which the Government is to spend up to $1.5 billion.

The company has also asked the Government to consider varying three components of the undertakings it accepted for its earlier operational separation. It said the undertakings involved would no longer be relevant in a fibre future.

Today Telecom said that in the year to June its adjusted earnings before interest, tax, depreciation and amortisation (ebitda) was $1.76b, down 0.2 percent from a year earlier.

Adjusted revenue fell 6.3 percent to $5.27b, and adjusted net earnings fell 21 percent to $380m, while expenses were down 9.1 percent or $351m to $3.51b.

For the June quarter adjusted revenue was down 1.9 percent from a year earlier at $1.34b, adjusted ebitda rose 5.4 percent to $428m, and net earnings fell 40 percent to $42m.

"Telecom has halted the significant earnings decline of the previous two years and achieved notable improvements in the trajectory of each of its businesses," chief executive Dr Reynolds said.

The company attributed most of the fall in revenue to continued competitive and price pressure in its legacy fixed line businesses.

Dr Reynolds said Telecom was "unshakeably committed" to delivering equivalence in the market place -- changing its processes and systems so that the core network was available to all service providers on the same service and price terms as it was to Telecom. Equivalence had been reached in nearly all areas.

But the company was concerned that substantial spending was going into systems change that was not benefiting anyone, Dr Reynolds said.

"It's not delivering equivalence."

The regulatory regime in this country was the most onerous in the world.

A whole set of major government policy issues needed to be settled along with the decision about building the fibre for UFB, he said.

They included whether the regulatory and legislative framework was right, and whether Telecom had clarity on the steps needed for structural separation and a demerger.

"This is the biggest structural change ever, potentially, in the New Zealand market place, and it's watched around the globe because nobody on the planet has done this, so we are kind of writing the book," he said

Far-reaching regulatory simplification and change was needed.

"New Zealand can't afford every flavour of regulation in the world all running concurrently, and some new stuff that the world's never tried before, and think that there's no cost to that. There's colossal and gigantic cost that flows to consumers from that."

In its results, Telecom was highlighting its free cash flow -- ebitda minus capital spending -- which grew 28 percent or $126m to $581m in the year to June. It was the first such growth since the regulatory shock that hit the company in 2006.

"This is a huge achievement and it reflects the concerted effort to stabilise ebitda and reduce capex," chief financial officer Russ Houlden said.