United States investors have been reducing their stake in Telecom in anticipation of its split with Chorus, according to the Wall Street Journal.
Chorus, Telecom's network and infrastructure business, is on the verge of becoming a separate public company to take part in the Government's ultra-fast broadband scheme.
Chorus will receive $929 million of taxpayer funds to roll out high-speed fibre internet cables in 24 towns and cities across New Zealand over the next eight years.
Chorus will be a wholesaler and own 130,000km of copper lines, more than 27,000km of fibre cables and more than 500 telephone exchanges while Telecom will become a stand-alone retail business and keep hold of its mobile network.
Both companies will have their own listings on the New Zealand and Australian stock exchanges.
The demerger is expected to be completed on November 30.
In a story on the Wall Street Journal website, Chorus chief executive Mark Ratcliffe said the impending split had prompted a shift in Telecom stock from the United States to Asia.
"There has been ... Asian buying of stock previously held there [in the US]," Ratcliffe said.
The move was natural because Chorus was the part of Telecom with stable cashflow but would not be listing on the New York Stock Exchange, he said.
"I understand there are quite a lot of retail investors - Mom and Pop investors - in the US that hold a lot of Telecom stock and they've held for a long time ... it's hard to know what they might think."
Although Chorus will not get its own listing on the NYSE, mechanisms were in place for US investors to buy shares, a Telecom spokesperson told the Herald.
Despite the selldown, the split opens the door for foreign investors to buy up Telecom.
Kiwi Share restrictions, set to lift when Telecom separates, mean no shareholder could own more than 10 per cent of the company and no foreigner can own more than 49.9 per cent without government and board permission.
These ownership restrictions will not apply to Telecom retail after the split but will remain in place for Chorus.
- additional reporting: BusinessDesk