UPDATE 1-Telecom Italia set to name Vivendi's CEO as chairman - source

(Adds Vivendi head comments, background)

MILAN, June 1 (Reuters) - Telecom Italia is expected to appoint Vivendi's chief executive Arnaud de Puyfontaine as chairman on Thursday, a source familiar with the matter said, as the French media group tightens its grip on the former national monopoly.

Last month Vivendi, Telecom Italia's biggest shareholder with a 24 percent stake, managed to fill two-thirds of the new board with its own candidates.

And earlier this week Vivendi won EU antitrust approval for its plan to gain control of Telecom Italia after it pledged to sell the group's 70 percent stake in broadcasting services firm Persidera.

De Puyfontaine is due to replace current chairman Giuseppe Recchi, the source said, adding Recchi himself would bring up the issue of governance at a board meeting on Thursday.

Vivendi declined to comment.

The French media group, headed by French financier Vincent Bollore, had been expected to propose de Puyfontaine as chairman when the Telecom Italia board came up for renewal last month but in the end Recchi was confirmed pending the EU ruling.

Recchi, who was appointed chairman in 2014, said in a newspaper interview on Thursday the sale of Persidera was not on the board's agenda on Thursday.

Vivendi, which has long set its sights on creating a media powerhouse in southern Europe, came under fire last year after it built up an unwelcome stake in Italian TV group Mediaset .

In April an Italian regulator told Vivendi to cut its stake in either Telecom Italia or Mediaset within a year to resolve a breach of rules designed to prevent a concentration of power.

Bollore is also a key shareholder in influential Italian investment bank Mediobanca (MDBI.MI), which controls insurer Generali.

On Thursday Bollore said the key issue for Telecom Italia now was to prepare for the arrival of French telecoms operator Iliad in the Italian mobile telecoms market.

Iliad, founded and controlled by maverick billionaire Xavier Niel, is set to launch in Italy by early next year, raising prospects of a new price war. (Reporting by Stefano Rebaudo; Writing by Stephen Jewkes; Editing by Greg Mahlich)