* Proposed 81 euros per share - three sources
* Kabel Deutschland should get over 90 euros - shareholder
* Vodafone shares fall in part on fears over costly deals
* Kabel Deutschland hits new high of 83 euros (Adds more source, analyst, shareholder comments, updatesshares)
By Kate Holton and Peter Maushagen
LONDON/FRANKFURT, June 12 (Reuters) - British mobile firmVodafone is pursuing Kabel Deutschland afterhaving an initial 7.2 billion euro ($9.6 billion) bid proposalknocked back by Germany's biggest cable operator, sources closeto the matter said on Wednesday.
The world's second-biggest mobile operator has long beenlinked with a move for Kabel Deutschland, which operates in itsmost important European market and would help it to meet growingdemand from customers for television, broadband, mobile andfixed-line services - so-called "quad play" - from one provider.
Vodafone sent a letter by email to Kabel Deutschland lastweek announcing its interest and indicating a price of 81 eurosper share, three people familiar with the matter told Reuters.
That proposal, which was a 10 percent premium to last week'sprice, was deemed to be too low by Kabel Deutschland, foursources said, speaking on condition of anonymity,
Those sources said the talks were amicable - with the firmsissuing identical statements to confirm the approach, withoutgiving any details - suggesting further contacts were likely.
One Kabel Deutschland shareholder, who also declined to benamed, said Vodafone's offer "must begin with a 9" euros pershare, which would take it to about 8 billion euros.
Any deal, which would be Vodafone's largest since 2007,could help it better compete against mobile operators, which arecutting prices, and against the pan-European cable group LibertyGlobal, which has been on an acquisition spree.
Analysts said U.S. tycoon John Malone's Liberty Global couldmake a counterbid for Kabel Deutschland, though they added itwould likely face greater regulatory scrutiny than Vodafonebecause it already owns Unitymedia in Germany.
Shares in Vodafone, which went ex-dividend on Wednesday,fell 5.7 percent, as some analysts worried about the cost of adeal and that it could signal similar moves in other countries.
Vodafone Chief Executive Vittorio Colao said earlier thisyear he could afford to do deals in Europe without having tosell his prized asset, a stake in U.S. group Verizon Wireless,which its joint partner Verizon Communication has said itwould like to buy in one of the world's biggest deals.
Kabel Deutschland shares jumped over 9 percent at one pointto a new high of 83 euros. They had been trading at 63 eurosbefore Vodafone's initial interest was reported in February.
EXPENSIVE
Germany is Vodafone's largest market excluding its U.S.venture and it has recently negotiated a deal with DeutscheTelekom (DT) that would allow it to rent lines fromthe fixed-line group to offer TV and broadband services.
"What might perturb investors is that this approach comes sosoon after Vodafone signed a wholesale DSL deal with DT that wasseen and touted as a solution to their convergent needs,"Deutsche Bank analysts said.
"To then approach KDG suggests that this is merely an infilland that infrastructure ownership is ultimately necessary toprovide a fully competitive convergent offer. Unsurprisinglythis is likely to read across into other markets."
One person familiar with Vodafone's thinking said theDeutsche Telekom deal would strengthen its hand if and when itcame to negotiate with Kabel Deutschland.
"Vodafone has the option not to buy fixed assets in Germanynow that it has the wholesale deal with Deutsche Telekom thatallows it to sell converged offers," the person said.
A banker advising telecom companies who is not involved inthis deal said Kabel Deutschland was expensive and that the twogroups could struggle to agree terms.
According to ThomsonReuters Starmine, Kabel Deutschlandshares trade at an enterprise value (equity plus debt) to coreearnings ratio of 10.1 times, compared with peers on 7.2. Theseinclude Liberty Global on 7.8.
STEALING A MARCH
Quad-play services have caught on rapidly in markets likeFrance and Spain where they have been pioneered by major localcompanies France Telecom and Telefonica.
Germany is some way behind and buying Kabel Deutschlandcould allow Vodafone to steal a march on Deutsche Telekom.
Vodafone owns some fixed lines in Europe, including inGermany, but only offers quad-play services in Portugal.
Analysts at Espirito Santo said there would be significantsynergies for Vodafone from migrating some of its fixed-linecustomer base on to Kabel Deutschland's cable infrastructure,possibly worth as much as 16 euros per Kabel Deutschland share.
They said the deal would also help defend its market sharein Germany, including against the possibility of KabelDeutschland ramping up its own mobile offering in partnershipwith Telefonica.
Citi analyst Simon Weeden said Vodafone could finance a dealthrough its own balance sheet. Vodafone has indicated it wouldbe willing to move to a lower credit rating of BBB+ for aninterim period to accommodate a deal.
Vodafone had 32 million customers in Germany at the end ofMarch, making it the biggest mobile operator in the country.
Kabel Deutschland is Germany's largest cable operator withabout 15 million of the 28 million homes passed by cable.
Vodafone usually works with Goldman Sachs and UBS onacquisition deals. A source close to the matter said earlierthis year that Morgan Stanley was advising Kabel Deutschland.
($1 = 0.7533 euros) (Additional reporting by Paul Sandle and Sophie Sassard inLondon, Leila Abboud in Paris and Alexander Huebner and HarroTen Wolde in Frankfurt. Writing by Kate Holton; Editing by MarkPotter)
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