The competition watchdog has raised "serious concerns" over Telstra's commitment to separate its wholesale and retail businesses, a critical part of its $11 billion deal with the NBN Co.

The Australian Competition and Consumer Commission today released a "preliminary view" saying it could not accept Telstra's undertaking to "structurally separate" and important changes would be required.

Telstra's undertaking, lodged with the regulator last month, sets out how the telco will shut down its fixed-line network and move its customers on to the $36 billion national broadband network.

It is a vital step in Telstra's plan to have shareholders approve an $11 billion payment from NBN Co, in a vote planned for October 18.

Telstra shares slumped on the news, falling as much as 5 per cent, and were recently down 10 cents, or 3.3 per cent, at $2.97. The shares are up about 6 per cent in 2011, easily beating the 10 per cent slide for the top 200 listed companies.