London, May 22: Arun Sarin, the head of Vodafone, is preparing to shelve the sale of Arcor, the group’s 1 billion euros (?680 million) German fixed-line unit, to concentrate on a push into broadband, The Times has learnt.

The mobile operator, which had long been expected to divest itself of Arcor, is believed now to be planning to keep it. However, the board has still to approve the U-turn. A final decision is expected at the end of this month.

With its European rivals such as Orange increasingly offering “bundles” of communications services, Vodafone is aware of the need to keep up. The German asset would prove valuable in helping the mobile giant’s explorations of the broadband market.

Sources close to the company said the business, in a market that is more advanced than Britain’s, could also provide a valuable testing ground for new converged services. This is all the more important, given the group’s decision to sell off its business in Japan ? the world’s most advanced mobile market.

A U-turn over the sale of Arcor would not be an embarrassment. The asset has proved to be a valuable, generating healthy returns for the company.

One city source said, “It has made serious money from Arcor. The sector has improved and Vodafone has got better at getting tough with the management of its non-mobile business.”

Speculation about a turnaround has been further fuelled by comments from Friedrich Joussen, Vodafone Germany’s chief executive, who said recently that the strategy with regards to Arcor was being “revised ... on an ongoing basis”.

Arcor is Germany’s second-biggest fixed-line company after Deutsche Telekom. It was acquired by Vodafone as part of its ?101 billion acquisition of Mannesmann in early 2000. At that time Vodafone was intent on being a pure mobile player ? a decision that it has since revised - and sought to sell off any fixed-line businesses that it acquired. The British group failed to find a buyer for Arcor when telecom valuations were high, and has hung on to the business.

The fate of Arcor is one of several subjects that analysts want to be updated on at the group’s strategy presentation this month at which the mobile giant has pledged to lay out its plans for growth. It is believed that, as part of its new “convergence” strategy, the group is already eyeing broadband providers in the British market, although it may also choose to buy the equipment and services wholesale instead.

The day is seen as critical for the future of Sarin, who, after a high-profile and embarrassing internal fight at the Newbury headquarters, now has to prove that his decision to move into fixed-line and broadband markets can pay-off.

A recent shake-up by the group of its organisation and an indication of its move into broadband was welcomed by analysts.