Telecom executives are blaming everyone but themselves for the company's faltering financial position, says a shareholders group.

Responding to the telco's comments last week on the problems of attracting investment, the New Zealand Shareholders' Association corporate liaison, Des Hunt, said Telecom needed to fix its high cost structure and improve the performance of its directors before it could complain about its operating environment.

Salaries were unacceptably high, given the low price of Telecom shares, he said.

"Questions should be asked why are there 3000 (staff) earning over $100,000 (a year). Their salary structure is their own problem. What industry has a salary structure like they have?"

According to Telecom's last annual report, 2495 of its 8629 employees (almost a third) earned more than $100,000 during the 2010 financial year, with eight earning over $1 million and 32 over $500,000.

"What I find disgusting is that Telecom [has not said], 'We've had a good run with salaries, we haven't performed, we all should take a 20 per cent cut' - there's another $100 million which would go to the bottom line for shareholders.

"And if (staff) don't like it, they can leave - or start to perform," Hunt said.

"The thing I'm concerned with is the average New Zealander is paying for their inefficiency and cost (in the price of phone services)."

As well as pay rates being excessive, he also said Telecom had too many employees and called for the board to address the overstaffing.

The past decade has been a bad run for the company's shareholders, Hunt said.

"You look at the loss of capital, it's gone from $12 billion or $13 billion down to $3 billion to $4 billion. Their shares were over $9 at the height, now they're down to $2."

Telecom chief executive Paul Reynolds told a summit last week the companies in the sector had gone from being the "darlings" to the "dogs" of the technology world as risks turned investors away.

"Telecom New Zealand's share price is probably the cheapest in the world (of its type) because of the perceived risk of the rules changing, of no return being earnable on investment," he said.

Hunt said the telco has fared badly under the watch of chief executive Paul Reynolds, who was appointed in June 2007.

"[Over the past five years] shares were $6 and now they've dropped down to $2, that's not a very good performance during the time (Reynolds) has been there is it? He's blaming everybody else, yet fundamentally there's issues that he and the board should have addressed a long time ago."

In the six months to December, Telecom's net profit fell 32 per cent to $165 million.

"I think the company's been out of control for a long time. Wherever you look, it's not a pretty picture," Hunt said.

On Friday Telecom shares closed down 2c at $1.98. They have ranged from $1.78 to $2.33 in the past year.