Telecom Italia to spend $4.2 bln in Brazil -report

SAO PAULO, July 6 (Reuters) - Telecom Italia (TLIT.MI) will invest 3 billion euros ($4.2 billion) in Brazil through 2011 to boost its Internet broadband services operation, a local newspaper reported on Monday.

The market for Internet services in Brazil offers "great potential" for the giant Italian company, Telecom Italia Chairman Gabriele Galateri told Folha de S. Paulo newspaper in an interview published on Monday. The company has invested 10 billion euros in Brazil over the past 10 years, Galateri added.

Galateri, 62, said rumors about a possible merger between Telefonica of Spain TEM.MC and Telecom Italia are speculation by "people and companies whose real interest is to destabilize Telecom Italia."

A decision whether to exit Argentina will be made based upon "how much value" the unit creates, Galateri told Folha, without elaborating.

Galateri said Internet services in Brazil offer more solid growth opportunities in the wireless segment than in fiber optics and fixed-line markets.

Shares of TIM Participacoes (TCSL3.SA)(TSU.N), the Brazilian wireless affiliate of Telecom Italia, fell 0.3 percent to 6.67 reais on Monday afternoon trading in Sao Paulo. (Reporting by Guillermo Parra-Bernal, editing by Gerald E. McCormick)