MILAN (Reuters) -Italian finance police have seized around 250 million euros ($271 million) from Telecom Italia (BIT:TLIT) (TIM) over alleged fraud through the unauthorised activation of services to customers, Milan prosecutors said.
TIM shares fell as much 2% on Thursday, underperforming a slightly positive Milan blue-chip index, with a Milan- based trader citing the news that broke late on Wednesday as negative for the stock.
Police also obtained seizure orders of money from six content service providers who work with TIM, bringing the overall sum involved to 322 million euros for alleged offences spanning 2017-2020.
TIM said it was surprised at the development, adding that between 2019 and 2020 it had refunded customers for irregular activations and blocked value-added services found to be affected.
"The company therefore trusts that every aspect of this matter will be clarified as soon as possible," it said.
However, there was concern in the market that the case would take some time to resolve.
"We expect a protracted legal case and possibly a significant reduction of the amount involved," broker Equita wrote in its daily report.
According to the statement from prosecutors, a user only needed to visit a web page or consult an app on their mobile phone to become signed up to services that charge a weekly or monthly fee.
A total of 23 individuals are under investigation, prosecutors said.
TIM is working on a complex turnaround plan centred on a planned sale of its fixed landline network to KKR, in a bid to its cut debt pile and revamp its domestic business, under pressure for years due to intense price competition.
($1 = 0.9228 euros)