Telecom's internet partner Yahoo!7 has taken over most of the responsibility for the Xtra website in what one analyst says is a clear sign that the company is distancing itself from providing digital content.
Telecom formed a joint venture with Yahoo!7 last December to replace the existing XtraMSN site with new online content services due to go live on March 1.
It is understood that Telecom had restructured its Xtra staff so that most fulltime senior staff were to be located from Yahoo's head office in Sydney, while the rest of the senior staff had taken redundancies.
The Xtra editorial team in New Zealand had been reduced to only two reporters who would work off-site from Telecom House.
Telecom said it had actually boosted the organisation from 20 staff to over 30 employees in Auckland and 10 based in Sydney but would not reveal what the roles of the staff would be in New Zealand.
Telecommunications analyst Paul Budde said Telecom's decision to let Yahoo!7 run Xtra when combined with its decision to sell Yellow Pages was "a very significant development".
"It shows the company has decided to be just an infrastructure provider, not a supplier of digital content," he said.
Budde believed Telecom would use the proceeds from the sale of Yellow Pages to rapidly expand its infrastructure and make it attractive for companies such as Yahoo!7 and Trade Me.
"Telecom will become the plumbers of the digital media economy. It makes perfect sense."
It would follow British Telecom's model of creating an aggressive wholesale regime to maximise the return on infrastructure, he said. Telecom said it had seven Xtra staff redundancies and four of these staff were already planning to head overseas.
It could not reveal the duration of the agreement with Yahoo!7 as it was commercially sensitive.
Telecom shares closed down 7c to $5.07 yesterday.