(Adds Vivendi denial, details)
MILAN Feb 7 (Reuters) - Italian phone group Telecom Italia denied media speculation that it was in talks to merge its prized wireless unit TIM Brasil with Vivendi's Brazilian subsidiary GVT.
Brazilian daily O Estado de S. Paulo reported earlier on Friday that a Telecom Italia executive met with the management of French media group Vivendi in recent days for preliminary talks about a possible tie-up between the two group's Brazilian units, citing a source close to the matter.
"(There are) no ongoing talks over a possible GVT deal," a Telecom Italia spokesman said.
A Vivendi spokesperson added the group had no knowledge of talks with Telecom Italia about GVT.
Wireless carrier TIM Brazil is Telecom Italia's main source of growth but has become the focus of tensions among shareholders over how the Italian telecoms group should cut debt and fund much-needed domestic investment.
Telecom Italia's board on Thursday agreed on a procedure that would introduce new safeguards for shareholders should it decide to sell the Brazilian unit.
TIM Brasil competes in Brazil with Telecom Italia's biggest shareholder, Telefonica, leading to worries among some investors that the Spanish telecoms giant might have been favoured if the unit was sold.
Shares in Telecom Italia closed up 2.8 percent on Friday at 0.865 euros, outperforming a 0.8 percent rise in Milan's blue-chip index. (Reporting by Stefano Rebaudo in Milan and Gwenaelle Barzic in Paris, Writing by Danilo Masoni and Agnieszka Flak; Editing by Elaine Hardcastle)