UPDATE 1-Telecom Italia keeps door ajar on GVT-sources
* Managers could be mandated to talk on lower price -source
* High price, Telefonica opposition discouraged bid -sources
* Telecom Italia shares up 0.1 percent
By Stefano Rebaudo and Sophie Sassard
MILAN/LONDON, Nov 28 (Reuters) - Telecom Italia may still enter the race to buy Vivendi's GVT broadband unit in Brazil if the French group lowers its price expectations, people familiar with the situation told Reuters.
The debt-laden Italian group had been mulling a bid to boost its presence in Brazil, where its TIM Participacoes unit has been a major source of growth in recent years.
But it has not taken part in the formal sale process so far, discouraged by the high price tag and opposition from its largest investor Telefonica.
Vivendi is seeking at least 7 billion euros for GVT, financial sources have told Reuters.
"Telecom Italia is not taking part in the formal process, but the issue will be decided at the board meeting on Dec. 6. The board could mandate managers to table negotiations based on a lower price," one of the sources close to the situation told Reuters on Wednesday.
"The 7 billion euro price tag that Vivendi appears to be asking is too high," the source added.
A second source familiar with the situation said Telecom Italia had opted not to present a non-binding offer because of the price and the conflict of interest with Telefonica.
"Telefonica has no voting rights but has inside influence. It didn't want Telecom Italia to buy GVT, its main competitor in Brazil," the source said.
This source said Vivendi would struggle to get 7 billion euros for GVT, with 5 billion euros considered the right price.
Telefonica, which has a strong presence in Brazil, is Telecom Italia's largest investor with a 10 percent stake held through a holding company known as Telco.
The Spanish group, which shares ownership of Telco with Italian financial heavyweights Generali, Mediobanca and IntesaSanpaolo, has no voting rights on Telecom Italia's Latin American issues.
"THROW MONEY AWAY"
Earlier in the day, Italian daily Il Sole 24 Ore said Telecom Italia had dropped plans to present a non-binding offer for GVT by a Nov. 20 deadline as the 7 billion euros asked by Vivendi meant a deal was not economically viable.
An analyst at an international brokerage said Telecom Italia would "throw money away" if it bought GVT for 7 billion euros.
The report in Il Sole 24 Ore linked the decision not to submit a preliminary offer for GVT by the mid-November deadline to Telecom Italia's expected rejection of an offer from Egyptian tycoon Naguib Sawiris to inject fresh cash into the company.
Over the weekend, Telecom Italia Chairman Franco Bernabe told Corriere della Sera his group had not taken part in the GVT sale process so far but considered GVT an interesting asset.
"GVT has always been an open issue. If the deal is done at a lower price, you do not need the capital increase," said one source familiar with the thinking of shareholders.
Sawiris has offered to inject cash through a capital hike at around the current market price of 0.70 euros per share, more than half the book price of Telecom Italia shares for Telco investors.
Telecom Italia shares were up 0.1 percent at 0.674 euros at 1358 GMT, outperforming the European telecom sector index , which was down 0.3 percent.
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