Brazil's Anatel regulatory agency said Friday that Spain's Telefonica could face a fine of 20 million reais ($10 million) if it fails to improve fixed-line telephone service for its Brazilian customers.

The company is under fire for service interruptions in Sao Paulo state, Brazil's most populous region, where Telefonica is the leading fixed-line operator.

Anatel gave the Spanish giant until Aug. 1, 2013, to reduce outages by at least 40 percent from the level registered during the 12 months that ended June 30.

The firm has only five months to comply with a Brazilian law requiring that customers be reimbursed for service outages.

Regulators also want monthly progress reports from Telefonica Brasil, which is likewise instructed to identify the executives who will be responsible for meeting the goals.

The company will be liable for 20 million reais in penalties if it fails to fulfill any of the conditions, Anatel said.

Telefonica, which is Brazil's leading mobile telephone operator, recently unified all its services in the Latin American nation under the Vivo brand.

A spokesperson for Telefonica Brasil told Efe the firm has no plans to publicly respond to Anatel. EFE