Jan 31 (Reuters) - French telecom operator Iliad on Wednesday said Vodafone had rejected its revised proposal to merge their Italian businesses.

Iliad said in December it had submitted a proposal to Vodafone to merge the Italian units, a move that would have combined its fast-growing consumer base with the British company's strength in business in a highly competitive market.

"The Iliad Group is confident that the offer presented was the best possible business combination to benefit a struggling Italian market and telecommunications industry," Iliad said in a statement. (Reporting by Diana Mandiá in Gdansk; editing by Milla Nissi)