Telefonica,T.Italia may merge Brazil units-paper

MILAN, May 12 (Reuters) - Telefonica (TEF.MC) and Telecom Italia (TLIT.MI) may merge their Brazilian wireless units after Spain's telecoms group with partners takes control of Italy's biggest phone group, Telefonica chairman was quoted as saying.

Telefonica and Italian banks Mediobanca and Intesa Sanpaolo, insurer Generali (GASI.MI) and Italy's Benetton family agreed last month to jointly buy Telecom Italia's parent from Pirelli (PECI.MI) for 4.1 billion euros ($5.53 billion) and debt.

But the tie-up between the two European telecom groups may clash with telecom sector regulations and antitrust rules in Brazil where Telefonica and Telecom Italia have units.

Telefonica's Chairman Cesar Alierta said a merger of the two wireless units -- Brazil's biggest mobile firm Vivo (VIVO4.SA) jointly controlled by Telefonica and Portugal Telecom (PTC.LS) and Telecom Italia's TIM Brasil -- may be in the cards, Italian financial newspaper Il Sole 24 Ore reported on Saturday.

"Why not? It's a good idea. We will see," Alierta was quoted by the newspaper as responding to a question from its reporter.

But a Telefonica spokesman in Madrid denied that Alierta has said that: "The chairman of Telefonica did not make those remarks."

Il Sole said Alierta was in Milan to meet top managers from Telecom Italia and banks Intesa Sanpaolo (ISP.MI) and Mediobanca (MDBI.MI).

Earlier this week, Telecom Italia Chief Executive Riccardo Ruggiero said Telecom Italia and Telefonica had never discussed merging their Brazilian mobile phone units.

There was no immediate comment from Telecom Italia.

Brazilian regulations forbid phone companies from owning operating licenses in two different companies that provide services in the same area.

-- Additional reporting by Juan Navarro in Madrid