The Telecommunications Users Association says the Commerce Commission should stop Telecom from acquiring the final block of the 700 megahertz radio spectrum.
Telecom has bid $83 million for the final block. It paid $66 million for three lots in the initial auction round last year.
In that round Telecom's rivals, Vodafone and 2degrees, picked up three and two blocks respectively.
Telecom says securing the fourth block means it is in the best position in the market to deliver a very high-performance 4G mobile network, including in less densely populated areas.
Acceptance of Telecom's bid will have to be cleared by the Commerce Commission.
Telecom Users Association chief executive Paul Brislen says the best outcome would have been for the final block to have been put aside.
He says the association was unhappy about this extra block of spectrum being auctioned mainly because it introduces an imbalance in terms of market share between the three mobile phone carriers.
Mr Brislen says it would also ratchet up the price per megahertz that the winning bidder, in this case Telecom, would pay.
"So Telecom has paid $83 million for five megahertz, yet last year it paid $66 million for three times that much, so it really does make the case for Telecom rolling out the network that much harder because of the cost that buying the licences incurred."
Mr Brislen says it will affect all the ability of the telcos to compete fairly. Instead of having three network operators each with exactly the same technical capability, Telecom has double the capacity of 2degrees in terms of 700 megahertz spectrum, which will make it very hard for 2degrees to compete in that space.
He says Telecom would be able to double the number of customers that 2degrees would have, for example, without it affecting the quality of each customer's experience, or it could offer customers twice the speed without having to increase its loading.
Mr Brislen says it's a real issue in terms of competition, and given how much Telecom has had to pay for the spectrum it's likely the pricing will affect the cost that has gone into buying those customers.
Commerce Commission 'unlikely' to block sale
Devon Funds Management analyst Phill Anderson says the regulator probably won't block the sale.
He says Vodafone and Telecom were both keen to get the spectrum because it would make their networks a bit quicker than that of their main competitor.
Mr Anderson says Telecom paid a high price for the spectrum at $83 million and it remains to be seen whether the company can get good value for that by rejigging its network to get faster performance and winning new customers.
He says it's not possible to rule out the Commerce Commission blocking the sale, but if it does it is unlikely it would then allow Vodafone to purchase it either, given they are both similar in the market.
Mr Anderson says 2degrees is likely to be lobbying for the spectrum to be set aside for a future date when they can afford to pay for it.
But Mr Anderson believes the Commerce Commission will allow the sale to go through saying it's a smallish addition in terms of Telecom's already sizeable spectrum holdings.
