Wellington, Sept 30 NZPA - Telecom's bosses took the opportunity at their annual meeting to let shareholders know they were confident of the company's future whether or not it was part of the Government's plans for ultra-fast broadband (UFB).

Partnering with the Government on UFB and carrying out structural separation of Telecom's business was definitely worth considering, chief executive Paul Reynolds told today's meeting in Christchurch.

But a better regulatory framework had to be agreed, with lower ongoing investment costs, less wasted regulatory investment, and less "strangling" regulation of the company's retail business.

"There are very few examples yet of fibre to the home providing any sort of return to investors. Something has to give if we're to meet society's aspirations, and earn a return," Dr Reynolds said.

Only in this country and Australia had governments proposed massive taxpayer investment in fibre to the home investment.

"In both cases this will create an enormous change in the market structure, and both aim to create new infrastructure in advance of economic demand by subsidising the build with taxpayer funds," Dr Reynolds said.

Telecom had choices available to it because of the resilience it had shown during the past three years, and the progress it had made.

But the global telecommunications industry faced tough times and profound challenges.

Revenue growth for the total market had stopped for telcos in mature economies.

"In New Zealand total revenues haven't grown for a couple of years, and analysts do predict that situation will remain over the next three," Dr Reynolds said.

Fierce competition and price cuts were causing revenue in traditional voice and data to decline, and growth areas such as mobile and broadband were struggling to catch up.

Next generation services were capital intensive, while asset lives were shorter, and the margins available were less than for the traditional services they replaced.

A huge focus was needed on costs.

Despite the challenges, Dr Reynolds said Telecom was in good shape.

"Whether we are a central and key partner for government on ultra-fast broadband, or whether we co-exist with the new network that will be built over the next 10 years or so, we're in good shape," he said.

"Ten years is a very long time in politics, and a very long time in telecommunications, too."

Under the tender process being run by government agency Crown Fibre Holdings, any telecommunications company that both owns infrastructure and sells services to end users is precluded from taking an ownership stake in any fibre that gets built under the government initiative.

So far, Crown Fibre Holdings has announced it is to start negotiations for UFB with lines companies in three regions.

At the start of August Telecom proposed a package that would result in it being split into two separate companies -- one that builds and maintains infrastructure and another that sells services to end users.

Telecom chairman Wayne Boyd told the meeting today that the company already had more than 25,000km of fibre optics in operation, roughly half the total required to extend fibre to 75 percent of New Zealand premises as intended by the Government.

"Frankly, wasting taxpayer funding and private investment on duplicating a network that is half way complete is economic madness," Mr Boyd said.

The best solution for Telecom, the telecommunications industry, and New Zealand was for Telecom to be at the heart of UFB, he said.

"But be assured, that should Telecom not be successful in agreeing an appropriate package with your Government, your company is well positioned to co-exist with state infrastructure too."