New Zealand Telecom will be split into three separate operating units by early next year as planned, Communications Minister David Cunliffe, quoted by an Associated Press report, said.
The Associated Press report said the split of the country's biggest fixed line phone company by subscribers into wholesale, retail and networks arms would have to occur by March 31, 2008, according to Cunliffe.
New Zealand Telecom now has 20 working days to prepare a draft separation plan, the report said.
Operational separation of the group is a key part of the government's strategy to deliver a more effective and competitive telecommunications sector, the report added.
Under the split-up, the carrier will be required to set up a separately branded networks unit and operate its divisions at arms length. It will also have to establish an independent oversight group to monitor the businesses.
The report further said Cunliffe denied a media report that NewZealand Telecom had struck a deal with the government to sell its fixed-line network business to avoid the three-way split of its business.