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By Anjuli Davies and Kate Holton
LONDON, Nov 28 (Reuters) - Vodafone is reviewingpotential acquisitions, including of Europe's leading cableoperator Liberty Global, to counter the pendingconsolidation among rivals in Britain, five people close to thematter said.
The internal deliberations at the world's second-biggestmobile operator, have picked up pace in recent days afterbroadband leader BT Group revealed it was in paralleltalks to buy either EE or Telefonica's 02.
If concluded, BT's foray into mobile is expected to tilt themarket towards selling more all-included bundles of fixed andmobile services. That makes it more important for historicallymobile-only companies such as Vodafone, EE, 02 and Hutchison's 3to have their own fixed networks or be condemned to being simpleresellers of BT's fibre.
The attraction of Liberty, which is backed by U.S.billionaire John Malone, is its ownership of cable networkscapable of carrying very high-speed broadband traffic to homesand business in nearly a dozen European countries.
In Britain, Vodafone would get its hands on the broadbandnetwork of Liberty's Virgin Media, which covers around half ofthe country. That would bolster the broadband network Vodafonegot in 2012 when it bought Cable & Wireless.
One person familiar with the situation said Vodafone hadapproached Liberty Global about a combination earlier this yearbut found a gulf on price expectations.
A deal would come after Vodafone undertook similar moves bybuying the Ono cable company in Spain and Kabel Deutschland inGermany as it seeks to either buy or build fixed-lineinfrastructure across Europe.
In addition to Liberty, Vodafone is also considering all itsoptions in Britain to bolster its broadband operation includinga deal for low-cost player TalkTalk, although this isseen as a weaker option since the company does not have manyfibre lines going into consumers homes.
"Liberty is the obvious one that makes sense," said a thirdperson close to the situation. "Vodafone need fibre and that iswhat Liberty has."
A fourth person said Vodafone's strategy team had beenmeeting for over a week to consider the different options.
The combination would create a communications powerhousewith annual sales of more than $80 billion, but is likely toface regulatory scrutiny in countries where the two overlap,such as Germany, Britain, and the Netherlands.
In Germany where Vodafone and Liberty compete in cable,competition regulators have taken a tough stance on combinationsamong cable companies.
It remains to be seen whether Vodafone will move ahead withmaking a bid for Liberty, or if it will seek an another way tobolster its UK fixed operation, such as renting lines orbuilding more itself.
"Absolutely, they are watching developments but that doesn'tmean they are going to pounce," said a fifth person.
Both Vodafone and Liberty Global declined to comment onFriday. (Additional reporting by Leila Abboud and Sophie Sassard;Writing by Leila Abboud, editing by David Evans)
