Telecom shareholders are set to reap a $1.1 billion windfall thanks to a widely expected capital return, but looking further ahead the earnings picture gets murky.

The capital return accounts for almost half the $2.24 billion Telecom made from the sale of its Yellow Pages business in March.

About 11 per cent of Telecom's shares will be cancelled, with a decision about the amount of cash per share to be made in July and the cancellation completed by September.

Chairman Wayne Boyd said the board's intention when setting the size of the capital return was to maintain a balance sheet structure with financial flexibility to enable investments.

But he added Telecom would not invest in new technology unless it could get a fair rate of return.

"This (capital) return does not preclude extensive future investment. Further investment in broadband must, however, be contingent on being able to retain sufficient regulatory certainty to earn a fair rate of return on an investment."

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But Telecom chief executive Theresa Gattung complained that six weeks out from the start of a new financial year she was not able to give the market guidance on what to expect in the year ahead, as there were "too many moving parts" to Telecom at the moment.

"It's not desirable, but it's the reality of where we are. Everything is so fluid at the moment, in terms of the operating model, timing of the delivery of separation and regulated services and the pricing of those regulated services."

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David