TELECOM ITALIA postponed the release of its 2009 annual results - set to be announced yesterday - in an unexpected move related to its role in what Italian prosecutors have called one of the biggest fraud cases in the country’s history.

The telecommunications group said late on Wednesday it that had decided to postpone announcing the results until March 25th because of the uncertainty caused following the fraud probe, which involves Telecom Italia’s internet broadband services division, known as Sparkle.

The fraud probe involves alleged tax evasion on telecoms services and has also embroiled Fastweb, another telecoms provider.

Franco Bernabé, Telecom Italia’s chief executive, was expected to address the issue in a conference call with investors late yesterday.

The fraud probe was announced this week by prosecutors in Rome who issued arrest warrants for 56 people, including the billionaire founder of Fastweb and former executives at Sparkle.

The authorities said it involved non-payment of VAT on telecoms services.

Telecom Italia said in a statement late on Wednesday that it had already alerted investors to the Sparkle investigation as early as its 2007 consolidated financial statements, and that it had severed ties with the Sparkle executives involved at the time.

Some analysts said yesterday that its decision to postpone its results until next month was even more dramatic in those circumstances.

Telecom Italia said the fraud probe involved activities at Sparkle between 2005 and 2007. Italian authorities on Wednesday seized €300 million ($405 million) of the unit’s cash and borrowings “as a precautionary measure”.

The company said this was the value of tax credits accumulated by the Sparkle unit as indicated to it by investigators in the fraud probe.

Telecom Italia said: “The chairman and the CEO, in the interest of all shareholders and employees, will take every possible step to protect the value of Telecom Italia.”