Telecom XT customers needing to contact emergency services are being told to use landlines instead of their cellphones while the network remains down.

Customers south of Taupo still cannot make or receive calls and text messages, or access mobile broadband.

In a statement a Telecom spokeswoman said "until service is restored, Telecom recommends that any XT customer experiencing issues attempting to contact emergency services on their mobile, should immediately use a landline instead".

Telecom retail CEO Alan Gourdie acknowledged the significant impact on XT mobile customers.

"We apologise and deeply regret any inconvenience our customers experience due to the interruption of XT services," he said in a statement earlier today.

He said Telecom had identified the cause of the fault and restoration work was well under way, but he was unable to say when the whole service would be back up.

Chairman of the Telecommunications users Association of New Zealand Chris O'Connell said his sympathy went out to Telecom "we feel more sorry for the customers".

"It sounds like a major problem," Mr O'Connell said.

"This is a big deal. You don't want this happening the week before Christmas, and especially the week after when people rely on cellphones more."

He said the outage was rumoured to be caused by a glitch in a software upgrade meant to fix an earlier fault.

In cases like these, he said, there is no offer of compensation, which would be a "huge cost", and probably passed on to the customer anyway through higher charges.

"It raises concerns about the robustness of systems.

"Everyone's been tolerant of teething problems but sometimes it reeks of the system being too lean. It's a bit of a worry," he said.

A Telecom spokeswoman said she could not say how many customers were affected by the outage, but said those on the CDMA network are not affected.

About 7am today Telecom posted the following message on social networking website Twitter: "We are having some issues with XT sites South of Taupo, Technical teams are working on restoring service."

More than an hour later, a new message was up: "XT sites south of Taupo have no coverage, currently a Severity 1 Fault being worked on to get service restored asap."

Telecom initially estimated the problem would be fixed about 10am, but later said it was taking longer than expected to fix the fault.

About three weeks ago, the XT network was down intermittently on sites south of Taupo for a day.

A technical fault had caused a loss of mobile service, including voice, SMS, and mobile broadband, for XT customers south of Taupo.