Gen-i, the information-technology arm of Telecom, is scaling back its operations in Australia and will axe around 120 jobs across the Tasman.
Telecom said it had reviewed Gen-i's operations in Australia and as a result will strip back its activities.
It will now focus on meeting the information and communications technology needs of large Trans-Tasman corporate customers.
As a result of this, staff numbers will fall from 180 to 60, Telecom said in a statement to the NZX.
Gen-i's new chief executive Tim Miles launched the review after joining the company last month and said an assessment of the New Zealand operations was also underway.
Miles could not comment on where this was at but said he was looking at which parts of the New Zealand ICT market Gen-i should be in.
"There might be some changes and things we decide we won't do in the future, I haven't finalised that," he said.
He said Gen-i has around 2400 staff and that its Australian operations did not make up a "significant" amount of Telecom's total annual revenue.
Telecom chief executive Simon Moutter said in February there would be job cuts "well into the hundreds" this year as the company seeks to reduce costs.
Miles said Gen-i had a very successful trans-Tasman business but there were issues of scale with other parts of its operations in Australia.
"If you're going to after substantial business in Australia in the ICT area you need scale to credible you scale to be able to deliver," he said.
The decision to sale back operations was "clear-cut".
"It was pretty obvious to me what needed to happen," Miles said.
Along with its redundancy costs, Gen-i said there would be other restructuring costs associated with the move.