Vodafone sues Telecom Italia

Vodafone Italy is seeking damages of more than €1 billion from Telecom Italia in a Milan court claiming the country's dominant telecoms provider abused its position in the market.

In a statement, Vodafone Group said the civil action claims that Telecom Italia committed a series of abuses between 2008 and 2013 with the intention and effect of impeding growth in competition in the Italian fixed-line market.

In May, the Italian antitrust authority said it had found evidence of abuse of dominance in network infrastructure and would fine Telecom Italia more than €100 million.

Vodafone said its civil action will set out how Telecom Italia's abusive actions have harmed competition and innovation, stifled choice and undermined the wider Italian consumer interest.

Damaged interests
The law suit will detail "how the incumbent has damaged the interests of Vodafone Italy by causing the company to lose existing and potential customers through predatory activities, restricting Vodafone Italy's ability to grow its fixed-line business, and forcing it to pay artificially high costs in order to compete in the market", Vodafone said.

Telecom Italia was not immediately available for comment.

Vodafone Italy, which filed the lawsuit, is 77 per cent owned by Vodafone, with the rest held by the UK company's US partner Verizon Communications. The move is the latest blow to Franco Bernabè, Telecom Italia's chief executive, who is struggling to implement a turnaround strategy as the group faces falling revenues in its fixed line and online business.

Telecom Italia has had to write down a further €2.2 billion in goodwill for the first half of the year but denied that it would be forced into an emergency capital raising to patch up a balance sheet battered by economic and competitive pressures.

The latest writedown has taken impairments close to €14 billion since the start of 2011 – a period when €10 billion was wiped off Telecom Italia’s market capitalisation as its share price more than halved.

Telecom Italia has considered various failed strategic moves in the past year to improve its struggling Italian business. – (Copyright The Financial Times Limited 2013)