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Vodafone Group Plc's Italian unit is seeking more than euro 1 billion ($1.3 billion) in damages from Telecom Italia SpA, claiming Italy's largest phone company abused its dominant position in the market.
"Vodafone has commenced litigation against Telecom Italia," the second-largest wireless carrier said in a statement on Sunday. "The civil action states 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."
Telecom Italia is convinced it will show the "absolute correctness" of its actions, it said in a statement. Italy's competition regulator fined Telecom Italia about euro 104 million for abusing its dominant position in network infrastructure in May. The company is appealing the decision.
Vodafone and Telecom Italia, the Milan-based former phone monopoly in Italy, are the two biggest wireless companies in the country, together controlling about two thirds of the mobile-phone market, according to the Agcom regulator. Vodafone, based in Newbury, England, doesn't have a fixed-line network in Italy, and Chief Executive Officer Vittorio Colao is seeking to sell combined packages of phone, Internet and television across the continent.
Goodwill writedown
The carrier may acquire Fastweb SpA, a unit of Swisscom AG, in Italy to expand its fixed-line and internet assets, people familiar with the matter said in June.
"The dispute might be a sign of the extension of the battlefield to the market of integrated fixed-mobile services," said Carlo Alberto Carnevale-Maffe, a professor of business strategy at Milan's Bocconi University.
Telecom Italia fell as much as 1.5 per cent and traded 0.8 percent lower at 48.7 cents at 9:57 am in Milan. Vodafone added 0.4 per cent to 200.2 pence on the London exchange.
Telecom Italia last week reported a first-half net loss of euro 1.41 billion after taking goodwill writedowns of euro 2.2 billion and cut an earning forecast on intensifying wireless competition. With its debt rating one step above junk and after failing to sell a stake to Hutchison Whampoa Ltd, Telecom Italia is working on spinning off its fixed-line assets.
