Brazil Prosecutors Bring BRL1 Billion Suit Against Telefonica

Brazilian public prosecutors brought a 1 billion Brazilian real ($437 million) suit against Spanish telecommunications giant Telefonica (TEF) for damages related to poor service over the past five years, the prosecutors' office said Thursday.

The suit filed at a Sao Paulo state civil court Monday is based on data compiled by consumer protection agency, or Procon, and the National Telecommunications Agency, or Anatel, prosecutors said in a statement.

"The bad service offered to customers is notorious," it said.

The damages claimed are equivalent to 10% of Telefonica's revenue over the last five years.

In Brazil, Telefonica runs Telecomunicacoes de Sao Paulo (TSP), or Telesp, which is Brazil's No. 2 fixed-line operator and has a thriving broadband Internet business. It also jointly controls Vivo Participacoes (VIV), Brazil's No. 1 cellphone provider, along with Portugal Telecom (PT)

According to public prosecutors Joao Lopes Guimaraes, Paulo Sergio Cornacchioni and Eduardo Ferreira Valerio, there are 18,000 cases against Telefonica in Sao Paulo courts relating to customer complaints.

"The inadequate, irregular, intermittent, inefficient, discourteous and disrespectful way (the company) treats the rights of its users ... clearly implies the breaking of the law," said the statement.

Telefonica officials were not available for comment.

Earlier in the week, Telefonica announced that it would invest $1 billion in Brazil during 2009, up 20% on the year before.

-By Alastair Stewart; Dow Jones Newswires; 5511 2847-4520; [e-mail]