One of TIM Brasil’s minority shareholders has filed a lawsuit against Telecom Italia (Rome, Italy), which owns 67% of the Brazilian operator, claiming the Italian company’s mismanagement has resulted in substantial losses for investors.
According to a Reuters report, JVCO Participações blames Telecom Italia for wiping 10 billion reais ($4.9 billion) off the value of TIM Brasil (Rio de Janeiro, Brazil). In a statement, the investment group said that Telecom Italia “has exercised its controlling power abusively, causing losses to TIM and its shareholders”.
The lawsuit relates to erstwhile TIM chief executive Luca Luciani. JVCO claims Telecom Italia hired him despite knowing he was the subject of an investigation into illegal SIM card activations.
Luciani resigned in May while that investigation was still ongoing, having guided TIM into the number-two spot in Brazil’s mobile-phone market.
Following his departure, regulatory authorities forbade TIM from providing mobile-phone tariffs in 19 of Brazil’s 26 states after a flood of customer complaints about the quality of the operator’s services.
TIM responded by promising to make improvements and was allowed to re-enter the market not long after the ban took effect. But the regulator subsequently launched a new investigation looking into whether TIM had intentionally dropped calls made by customers who were being charged on a per-call instead of a per-minute basis.
TIM has denied those accusations.
To add to the operator’s difficulties, Telecom Italia revealed in August that authorities had presented TIM with a bill for back taxes amounting to 1.27 billion reais.
Telecom Italia is challenging the bill but JVCO recently lent it credence by criticizing the company for poor accounting practices, including not setting aside enough cash for the payment of taxes.