An Italian court of appeals has told the government that it must pay approximately €1 billion ($1.04bn) to Telecom Italia (TIM) as part of a legal dispute that stretches back to the late 1990s.

Bloomberg reported this week that the court rejected the government's appeal on an April ruling that it must pay about €530 million ($551m) plus interest for licensing fees the company paid but were not actually due.

A court in Rome ordered the government to pay the sum after TIM sought to recover the license fee it was required to pay to the state in 1998, the year after the telecoms sector was deregulated.

In a statement at the time, TIM said that the amount due for the original license fee is €500m ($520m), plus a revaluation accrued interest for a total of about €1bn ($1.04bn).

The court's decision to uphold its initial decision last year means that TIM will be able to book the €1bn ($1.04bn) as credit in its balance sheet.

Neither the Italian government nor TIM have commented on the court's decision.

The case isn't quite over just yet, however, as Italy's Supreme Court is expected to give its ruling after the government appealed against a lower court decision that found against it last year.

Telecom Italia sold its fixed-line network last year to investment firm KKR in a deal worth as much as €22bn ($22.9bn) with earn-out payments.

TIM, which is Italy's biggest telco, agreed to sell its landline grid network to KKR in November 2023. The deal was supported by Giorgia Meloni's Italian government which plans to take a 20 percent stake.

Late last year, TIM confirmed it received a binding offer of €700m ($728m) for its Sparkle unit from Italy's Ministry of Economy and Finance (MEF) and Retelit, a company controlled by the Asterion fund. The bid will be effective until January 27, 2025.