The firm, a unit of Italy's Telecom Italia Spa (TI, TIT.MI, TIA) Tuesday rejected allegations in a newspaper report that it is deliberately cutting off customers of its unlimited calling plans, known as Infinity.

"TIM Participacoes S.A. vehemently denies that any eventual call cutoffs experienced by its Infinity customers are the result of a deliberate act by the company," the firm said.

Tuesday, the Folha de S. Paulo newspaper reported Anatel was investigating problems with dropped calls on Infinity plans. The report cited a preliminary Anatel document that concluded TIM's Infinity customers, which are charged per call, suffered much higher rates of dropped calls than customers on its other plans, which are charged per minute.

On March 8, 8.2 million customers were affected by dropped calls, and they paid 4.3 million Brazilian reais ($2.1 million) for services "not fully provided," according to the Anatel document.

Anatel said the report referred to in the Folha article was only part of its investigation, and TIM has yet to present its explanations. Only after that process is completed would Anatel decide whether to take any action against TIM, it said.

TIM said the Anatel report contained "grave errors" that misrepresented the information and led to the wrong conclusions. The firm said it has delivered its response to the regulator.

"If it's true it will certainly be a big problem; the company will have to explain about this," Communications Minister Paulo Bernardo said in an interview in Brasilia. "A report was released that says this might be happening. It's not conclusive."

"The company has the right to defend itself and explain what happened," Mr. Bernardo said.

It is particularly harmful for TIM, which has predicated a recent turnaround in its fortunes based on transparency and clear communications with its customers. Infinity was launched in March 2009 and has helped propel the company into second place in the Brazilian mobile-phone market, with around 27% market share, behind Telefonica Brasil SA (VIV, VIVT4.BR), which has 30%.

TIM has been hit by a series of scandals in recent months, including the sales ban and the resignation of former chief executive Luca Luciani in an investigation into irregularities at TIM's parent company in Italy.

TIM's shares traded in Sao Paulo closed down 3.7% at BRL8.70 Tuesday, while the Ibovespa stocks index was down 1.1%. The company's shares are down nearly 6% from the beginning of the year.

--Jeffrey T. Lewis in Brasilia contributed to this article.

Write to Matthew Cowley at matthew.cowley@dowjones.com

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