Communications and Information Technology Minister David Cunliffe has told Telecom he will not approve its amended separation plan.
"I have issued Telecom with a notice of requirements of further changes needed to their undertakings to finalise the operational separation process," Mr Cunliffe said today.
Last year the Governmentordered Telecom to split its business into wholesale, retail and network divisions.
Its original draft plan was put out for public consultation in October and the amended plan in December.
Today Mr Cunliffe said public submissions on the amended plan had raised some significant issues which he had considered carefully.
"The feedback from submitters has been instrumental in identifying the need for greater clarity to ensure that Telecom's operational separation will be effective and enduring," Mr Cunliffe said.
"In general terms, Telecom's revised undertakings come close to meeting my amending determination. However, there are a few areas where clarification of the undertakings is still required.
"In particular, I have asked Telecom to provide a clear upper limit on group-based incentives.
"This is to ensure that Wholesale management is encouraged by those incentives to treat all its customers (including Retail) equally. I want this to be consistent with robust operational separation," he said.
"Other key changes requested include greater clarity around IP interconnection, as well as a range of other technical and definitional matters."
Telecom has until 5pm on March 25 to revise its separation plan.
