Telecommunications company Chorus's $95 million payout to investors is being questioned after the company's warning about its financial viability.
The company is also receiving millions of dollars in taxpayer funding to build an ultrafast broadband network.
Communications Minister Amy Adams yesterday announced an independent assessment of Chorus' financial position and its ability to deliver ultra-fast broadband.
This comes after the company said the Commerce Commission's recommended cut to wholesale broadband prices for its copper network could put funding for the UFB project, which uses fibre, in jeopardy.
Chorus's share of the UFB rollout is funded by loans and equity payments from the Government totalling $923 million over the life of the project as well as revenue from selling wholesale copper-based services to internet retailers.
But last year while receiving millions in taxpayer funding for the project, it still paid investors 25.5c a share or $95 million.
Telecommunications Users Association (Tuanz) chief executive Paul Brislen, who is part of a group opposing Government intervention in the affair, questioned whether the payout was appropriate.
"When you are working on a project like this it's appropriate that you take the long-term view and as a shareholder when you're looking at a monopoly network provider as Chorus is and will be when this is done, it's an investment in the future. They should be putting all their money and efforts into the deployment."
The taxpayer was effectively subsidising Chorus' dividend, he said.
Labour leader David Cunliffe agreed, saying it was reasonable to expect Chorus to reduce its dividend payouts while it was investing in the ultra-fast broadband.
"In any case it is completely unacceptable for shareholders to take the profits or upside and the taxpayer to take the loss and that's why we've lambasted the Prime Minister's rather foolish comment that his policy options might include taking an equity stake with more taxpayers' money or letting the company off from the terms of the contract that it willingly agreed to in the knowledge that this regulatory review would take place."
Ms Adams said she had on Wednesday asked Chorus "to come back to me with a very detailed indication of what they intend to do with their own investment picture to address those very things" including dividend payouts.
"While they're doing their bit and not asking for anything from us, their dividend stream and their shareholders and how they want to balance their debt and dividend return is a matter for them and their shareholders."