Chris Gent, chief executive of the mobile phone group, recently approached Vivendi chairman Jean-Marie Messier with an offer to buy its 44 per cent stake in Cegetel, the French fixed-line and mobile operator.
However Vivendi, whose interests stretch from British railways to the Paris St Germain football cub, has decided to retain its telecoms businesses and turned down Vodafone's approach.
The rejection has come as a severe blow to Vodafone, forcing it to go- ahead with an expected pounds 65bn bid for Mannesmann, the German telecoms and engineering combine. An offer could come as early as this week.
Vodafone's European strategy was thrown into disarray last month when Mannesmann announced a pounds 19.8bn agreed bid for Orange, Britain's third largest mobile phone operator. Vodafone had hoped to counter Mannesmann's move by acquiring Vivendi's controlling stake in Cegetel.
Analysts believe it has been out-manoeuvred by Mannesmann, which already has a stronger presence than Vodafone in France, Italy and Germany and now threatens Vodafone's leading position in the UK. Mannesmann's acquisition of Orange is being presented as a fait accompli, after it secured the support of Hutchison Whampoa, the Hong Kong investment group that owns 45 per cent of the mobile phone operator.
Now Vivendi's snub has forced Vodafone to embark on the high-risk strategy of a - potentially hostile - bid for Mannesmann. Although Mannesmann chairman Klaus Esser is unlikely to be amenable, Vodafone is still hoping to persuade him to accept an agreed bid. A hostile takeover would force Vodafone to pay a second premium on top of the one that Mannesmann will have to shell out to acquire Orange.
There is speculation that Vodafone will recruit France Telecom or DoCoMo of Japan to acquire Orange in the event of a successful bid for Mannesmann. If Vodafone succeeds, it would mark the world's largest ever unsolicited bid and also the first time that a German company has succumbed to a hostile foreign takeover. Under German takeover law, Vodafone would have to secure the approval of 75 per cent of Mannesmann shares in order to exercise control over the company.
Vodafone would only say on Friday that it was exploring ways of developing its "existing long-standing relationship" with Mannesmann.
Vivendi's decision to retain its telecoms interests has dealt a blow to a number of parties that had been eyeing its Cegetel stake as a means of expanding in Europe. Both British Telecom and Mannesmann, which own 26 per cent and 15 per cent of Cegetel respectively, are also thought to have made overtures to Vivendi. Cegetel owns France's second largest mobile phone network, SFR.