Telefonica may stay out of Telecom Italia's Brazil votes - TIM CEO

RIO DE JANEIRO (Reuters) - Telecom Italia SpA may suggest to Brazilian regulators that key shareholder Telefonica SA continue to refrain from decisions involving its Brazilian unit, TIM Participaçoes SA, TIM's CEO said on Wednesday.

As Spain's Telefonica has increased its stake in Telecom Italia, questions have resurfaced about how the two phone companies can be running rival businesses in Brazil.

TIM Participaçoes CEO Rodrigo Abreu told reporters in Rio de Janeiro that one solution would be to extend the 2007 agreement for Telefonica's representatives on the Telecom Italia board to refrain from voting on decisions related to Brazil.

The proposal highlights sensitive antitrust issues in Brazil, where officials have protested the idea of a merger between the country's two biggest mobile carriers, Telefonica Brasil SA and TIM.

Telecom Italia is also considering a sale of its 67 percent stake in TIM, a person familiar with the matter told Reuters this month. However, Abreu has vigorously denied that a process to sell TIM is under way.

(Reporting by Luciana Bruno; editing by Matthew Lewis)