"Since this morning there have been investigative procedures" at the Deutsche Telekom offices, a spokesman for the prosecutor's office in Bonn said.
Deutsche Telekom was forced to concede at the weekend that it had hired an outside firm to track hundreds of thousands of phone calls by senior executives and journalists to identify the sources of press leaks.
The Bonn-based company said the "ill-advised use of communications data" happened in 2005 and probably 2006 and has to date conceded only to spying on the magazine Capital. But on Thursday the Financial Times Deutschland alleged that it became a
victim of espionage by Deutsche Telekom several years earlier.
The daily alleged in a front-page report that Deutsche Telekom had hired private detectives to spy on its reporters in 2000 and had even secretly filmed the newsroom.
"Their main target was the FTD's chief reporter at the time, Tasso Enzweiler, who often broke stories about the telecommunication sector. "The private detectives even used a hidden camera to try and get information about Enzweiler's source from the news room in Cologne," the newspaper said.
Both the FTD and Capital belong to the publishing house Gruner und Jahr, which is turn is owned by German media giant Bertelsmann. The publisher has warned that it is considering both criminal and civil charges against Deutsche Telekom.
The telecoms giant insists that the Berlin consultancy firm it hired had not listened to journalists' conversations, but only logged details on who phoned whom as well as the time and duration of the calls. But the scandal is proving deeply damaging in a country already nervous about "Big Brother" style privacy invasion and chief executive Rene Obermann has embarked on a damage control campaign.
Obermann, who was not in charge at the time of the spying, announced that state prosecutors and a law firm in Cologne were investigating the affair and promised Deutsche Telekom users that they were not being wiretapped.
The "personal data of our millions of fixed-line and mobile clients was secure," he told Germany's top-selling newspaper Bild.
So far it is not clear who at Deutsche Telekom ordered or approved the decision to send private detectives into news rooms, the FTD said on Thursday. "It is not clear to what extent the company's security section may have acted on its own," the newspaper said.
It is the latest in a string of privacy invasion scandals to a hit a major German company.
Earlier this year it emerged that discount food retailer Lidl had hired detectives to install micro cameras that filmed employees while at work and on their breaks. Lidl recorded employees when they used the toilet, their conversations while on break and kept track of who their friends outside work were, reports said.