* Vodafone group managers reviewing German plan -magazine
* Kabel Deutschland market capitalisation 6.1 bln euros
* Kabel shares jump 8.7 pct, Vodafone down 1.1 percent (Adds background, analyst reaction)
By Harro Ten Wolde and Paul Sandle
FRANKFURT/LONDON, Feb 13 (Reuters) - Vodafone isconsidering a bid for Germany's Kabel Deutschland toexpand the UK-based mobile company's services in Europe'sbiggest economy, according to a person familiar with the matter.
No final decision has been made at Vodafone about a formaloffer, the person said, of a deal which would enable the UKcompany to sell bundled services of mobile, fixed-line andpay-TV, which helps to boost customer loyalty.
Germany's Manager Magazin reported on Wednesday that thehead of Vodafone's German operations had put forward a plan tobuy the German cable operator to the group's senior management.
The news comes only a week after John Malone's LibertyGlobal struck a deal to buy British cable group VirginMedia for about $15.75 billion in stock andcash.
Kabel Deutschland shares ended the day 8.7 percent higher at69.17 euros, giving it a market capitalization of 6.1 billioneuros. Including 2.8 billion euros in net debt Kabel Deutschlandhas an enterprise value of 8.9 billion euros ($11.9 billion).
Analysts polled by StarMine value Kabel Deutschland'senterprise value at 10.8 times core profit. They expect KabelDeutschland's core earnings to reach about 970 million euros inthe year to June 2014.
Vodafone and Kabel Deutschland declined to comment.
Vodafone, unlike its main competitors, owns mostly mobileoperations in continental Europe, reducing its ability to offercombined services to consumers or businesses and offload datatraffic onto its own fixed line networks.
Such considerations led Vodafone to buy British fixedoperator Cable and Wireless Worldwide (CWW) last year.
In Germany, however, it owns the Vodafone D2 fixed line andbroadband business. The business, previously known as Arcor, hasabout 12 percent of the broadband market, against 40 percent forDeutsche Telekom; the two companies are neck and neck in mobile.
Vodafone shares were down 1.1 percent to 172.1 pence.
Goldman Sachs and Bernstein Research analysts have writtenthat Vodafone should look at buying cable assets in Spain,Germany and the Netherlands to keep up with competitors such asTelefonica and Deutsche Telekom.
Vodafone has looked at Kabel Deutschland several times inthe past since it would complement its mobile business inGermany, said a second person familiar with Vodafone's strategy.
Analysts at Espirito Santo Investment Bank said they couldsee the rationale for such a deal.
"Vodafone said just last week at its results that M&A wasstill on the cards to support its convergence strategy, as withthe recent CWW and Telstra deals," analyst Nick Brown said.
However, he added that Vodafone's fixed-line assets inGermany meant any potential deal would face scrutiny fromantitrust regulators.
REGULATORY CLEARANCE
Jefferies said a bid from Vodafone could flush out a counterbid from Liberty Global, although the U.S. company had to makesignificant concessions to win regulatory clearance for itsacquisition of KabelBW, another German cable operator, in 2011.
"Vodafone-Kabel Deutschland would elicit little regulatoryconcern in our view, not least as it would create a more viablecompetitor to Deutsche Telekom," they said.
Cable operators Liberty Global, Ziggo, KabelDeutschland and Virgin Media have been winningcustomers and investors with their expansion into broadband.
Their cable lines, designed to deliver TV to homes, havebeen upgraded to carry voice calls and Internet at speeds oftenfive times faster than competing services from the telcos.
Germany's cable market, which was once one of Europe's mostfragmented, still has a proliferation of smaller regionalplayers offering television and broadband services.
Cable firms have made relatively little inroads intoGermany's fixed broadband market.
Kabel Deutschland, the largest cable operator with about 15million of the 28 million homes passed by cable, said inDecember that the market penetration of it and its rivals infixed line broadband was below 15 percent. ($1=0.7427 euros) (Reporting by Harro ten Wolde, Peter Maushagen, PhilippHalstrick, Leila Abboud and Paul Sandle; Editing by JaneMerriman and Mike Nesbit)
Vodafone (VOD)
