(Adds detail, analyst comment)

WELLINGTON, Sept 26 (Reuters) - U.S. phone giant Verizon Communications has exited its near 20 percent stake in Telecom Corp of New Zealand <TEL.NZ>, according to a substantial security holders notice filed with the New Zealand Stock Exchange on Thursday.

Bell Atlantic Holdings Ltd, the Verizon subsidiary which owned the Telecom stake said it had agreed on Thursday to sell 370 million Telecom NZ shares "to Merrill Lynch, Pierce Fenner & Smith Inc, for its own account and the accounts of its clients".

No price for the deal was disclosed..

At Telecom's closing price of NZ$4.82, the stake of 370 million shares would be worth around NZ$1.78 billion ($837 million).

"First impression is that it's good for Telecom," Forsyth Barr telecoms analyst Jeremy Simpson said.

"It clears a shareholding block which has been overhanging the market for some time."

Verizon, the biggest U.S. local telephone carrier, has been seeking to sell down its cornerstone stake in Telecom NZ, New Zealand's largest listed company, for nearly a year.

Simpson said the expectation was that the shares would be farmed out to global institutional investors.

"If it gets done at a bit of a discount to current prices, I think there's a good chance it'll get reasonably well received."

Verizon also said it had sold around 11.4 million shares in Telecom between January 14 and April 24 this year but was not required to file notice as the total was less than one percent of Telecom.

Telecom was not immediately available for comment.

($1=NZ$2.13)