Australia's competition regulator voiced objections on Tuesday to the terms of the proposed split of dominant phone company Telstra Corp, threatening to delay an historic reform designed to wire up the entire nation to high-speed broadband.

The news knocked Telstra shares down 2.6 percent at A$2.99, after touching a low of A$2.92, down 4.9 percent.

Telstra recently hammered out an agreement to hand over its fixed-line telecoms infrastructure, including cable ducts, to a state-run company for use in the government's $38 billion project to build a high-speed national broadband network.

But the Australian Competition and Consumer Commission (ACCC) said Telstra's separation plan could not go ahead in its current form and called for important changes.

Analysts said the watchdog's concerns would probably only mean a bump in the road to getting the deal done.

It won't stop the process but delay it slightly, said fund manager Theo Maas, of Arnhem Investment Management.

Telstra's shareholder vote, too, may be delayed but Telstra could still go with it on schedule even before ACCC approval, if its negotiations with the regulator are close to finalizing.

Telstra, whose shareholders are due to vote on the separation plan on October 18, said it had not seen the regulator's statement and would review it before making a comment.

The ACCC's new chairman, Rod Sims, said the commission had several concerns but noted some of them were readily correctable by Telstra.

The broadband project aims to bring high-speed Internet access to more than 90 percent of Australian households using fiber-optic cable, with the rest covered by wireless or satellite.

Broadband speeds in Australia are below the OECD average at 32.4 megabits per second. About 60 percent of households have a broadband connection, similar to New Zealand and the United States, but well behind South Korea on about 95 percent.

Arnhem Investment's Maas said the ACCC's concerns focused mainly on the transition period during which Telstra would hand over its fixed-line assets to the new network.

The concern still lies on the road toward the National Broadband Network, he said.

With NBN being a 10-year process, Telstra will have reasonable power to disadvantage competitors from access to their old copper network during the roll-out period, he said.

(Reporting by Mark Bendeich and Narayanan Somasundaram in SYDNEY and Sonali Paul and Victoria Thieberger in MELBOURNE; Editing by Ed Davies)

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