Cabletalk Group said a decision by TelstraClear to appoint another company for South Island field services would hurt profitability.
Cabletalk directors were still assessing the financial impact of yesterday's TelstraClear decision, but said it would have a detrimental effect.
Earlier this month, the listed telecommunications company warned that a sharp decline in revenue and a rise in debtors since December would push it into an operational loss, and downgraded its forecasts.
Discussions with another telecommunications company continued, but the outcome was uncertain, chairman Ross Keenan said.
Shares in Cabletalk have fallen from 52c in April to 8c today.
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