I don't think the telco would care, the contract is valid, they cannot resell the phone.

What you can do is ask her either pay it herself (change to her name) or ask for the phone back. If she refuses to do both, let her know that it is your property, and that you can make a police report against her for theft. If she is not fazed, then go ahead and make that police report.

You can at best case scenario retrieve the phone back (with all the accessories and box if possible) and resell it to pay for the penalty. You may not recover everything, but it's better than nothing. You can also ask if you can cancel her sim card and use the line for your own. You may not get the phone back, but at least you can make use of the line somehow (hotspot or sth).

has he contacted the telco to explain about the situation?

If everything is under his name, from this point on treat it as theft:

• cancel sim
• lodge police report
• bring police report as support document as you go in person to the service centre. No need to tell long story - just say someone took your phone under contract so what can you do. Might still be on the hook for something, but establish the phone has been stolen