* Appoints Goldman Sachs to advise on options-source
* Kabel Deutschland hires Morgan Stanley, Perella-source
* Potential 10 bln deal would transform German telco market
* Vodafone looking at fixed assets in Europe
* German antitrust regulator would need to review deal
By Arno Schuetze and Peter Maushagen
FRANKFURT, Feb 19 (Reuters) - Vodafone moved closer to apossible 10 billion-euro bid for German cable operator KabelDeutschland by hiring long-time banker Goldman Sachs to advise on options, a person with direct knowledge ofthe matter told Reuters on Tuesday.
Kabel Deutschland, Germany's biggest cable company, hasretained Morgan Stanley and advisory firm PerellaWeinberg to defend its interests in the event of a Vodafoneapproach, a second person with direct knowledge said.
An acquisition would transform the German telecoms market,which has been one of the more resilient in a European sectorplagued by deflation in prices and tough competition.
It would also be Vodafone's biggest deal since it enteredIndia in 2007 and mark a change in strategy for the group thathas long has owned largely mobile operations in continentalEurope and relied on renting broadband lines from competitors.
Sector bankers and some analysts argue that Vodafone needsto acquire fixed assets to fight off challenges from low-costmobile players and telecom and cable rivals pushing discounted,all-inclusive mobile and fixed bundles.
Vodafone could save around 300 million euros a year byrelying less on Deutsche Telkom lines into consumers' homes andmight also offload mobile traffic on to its own fixed network.
Vodafone is now neck and neck with Deutsche Telekom in termsof mobile market share, while it holds only 12 percent of thebroadband market to Deutsche Telekom's around 40 percent.
Germany's cable operators, led by Liberty Global's UnityMedia brand and Kabel Deutschland, hold about 13percent of the broadband market and have been winning customersfrom Deutsche Telekom with cheaper prices and higher speeds.
Vodafone would boost its presence in its biggest Europeanmarket in Europe by acquiring Kabel Deutschland but would needclearance from competition regulators who have blocked cablemergers over concerns about higher prices for consumers.
TELE COLUMBUS HITCH
On Tuesday, Kabel Deutschland said its agreement to buyfellow cable operator Tele Columbus for 618 million euros ($825million) was at risk due to German antitrust concerns, openingthe door for a counterbid from rivals.
UnityMedia has always said it would look at opportunities inthe German market, but it may have to act fast as cable dealshave become hot in recent weeks helped by easier access tofinancing on debt markets.
Deutsche Telekom has also in the past expressedinterest in Tele Columbus.
Kabel Deutschland said late on Monday it had offered to sellTele Columbus networks in Berlin, Dresden and Cottbus, but thecompromise was viewed as insufficient by the German FederalCartel Office (FCO).
"The FCO requires the divestment of approximately 60 percentof the Tele Columbus networks in Eastern Germany - twice as manyas offered by Kabel Deutschland," Kabel Deutschland said in astatement.
Kabel Deutschland's network covers some 8 million householdscompared with 7.8 million for Liberty, which earlier this month struck a $15.7 billion deal to buy British cable group VirginMedia .
The German cartel office had no comment on a possibleVodafone bid for Kabel Deutschland.
Espirito Santo investment bank said a Vodafone deal forKabel Deutschland would be less likely to run into antitrustissues.
"We do not believe the FCO's decision with respect to TeleColumbus closes the door to a move by Vodafone," wrote theanalysts. "In our view the key difference between the situationsis the ownership of the customer networks."
Vodafone's broadband business relies largely on rentinglines from market leader Deutsche Telekom, while Tele Columbushas its own network in Eastern Germany.
Vodafone, Goldman Sachs, Morgan Stanley, Kabel Deutschland declined to comment. Perella was notimmediately available for comment.
Vodafone (VOD)