Vodafone, Britain's biggest mobile phone company, confirmed on Wednesday speculation that it has made a £28bn ($45bn) merger approach to American mobile phone operator.

However, the offer was made without Air Touch's prior knowledge and newspaper reports that executives are set for an early meeting over the proposal is being interpreted as the US firm's taking the proposal seriously.

Vodafone executives are said to be in the US already after arranging a meeting with their Air Touch counterparts.

AirTouch already has a suitor, Bell Atlantic, one of America's largest domestic telephone service providers, and Vodafone could face a bidding war.

And newspaper reports suggested that MCI Worldcom, the second biggest long distance operator in the US, was also considering getting into the bidding auction.

Shares surge

Record numbers of suscribers are signing up with Vodafone

Shares in telecoms companies at London's stock exchange had rocketed this week after reports that Vodafone had made the bid to take over San-Francisco based AirTouch, the biggest independent wireless phone company in the US.

Vodafone shares hit a record 1,124.5p before easing back to 1075p on Thursday. Euphoria also swept through other telecoms stocks with BT gaining 5.5% at 990p.

A merger with Vodafone would create a global cellular giant worth around £60bn ($100bn).

Vodafone's stock was already buoyed by Monday's news that record numbers of subscribers had signed up to its service.

AirTouch shares have also climbed strongly on the US market. Mark Lambert, analyst with Merrill Lynch said: "The growth in the telecoms sector is a continuation of the trend that started last year. "It is not just the UK but a European and world-wide phenomena.

"Telecoms is benefiting from the growth in Internet data and mobile phone use. The increasing number of UK subscribers is very exciting."

The telecoms sector is enjoying a boom period

AirTouch has major overseas holdings, particularly in continental Europe, that would compliment Vodafone's interests.

Rival bids

The deal could turn into a bidding war as AirTouch is already in merger negotiations with Bell Atlantic, one of America's largest domestic telephone service providers.

If the deal with Bell goes through it would create a west-to-east coast link-up for the 61 million users in the US and put pressure on AT&T, the nation's largest long-distance company, to lower its prices.

On the other hand Vodafone and AirTouch are already partners in Globalstar, a satellite-based mobile-phone system.

The companies also share stakes in wireless carriers in Sweden and Egypt and compete head-to-head in the German market.

A deal could see the two companies strike out to form a pan-European mobile communications network.

Record custom

Vodafone, valued on the stock market at £32bn, would fund the deal mostly with shares rather than in cash, it was reported.

On Monday, the company soundly beat market expectations by reporting that a record 1.8m new customers joined its networks in the fourth quarter of 1998, including 933,000 in Britain and 862,000 overseas.

Vodafone now has a worldwide customer base of more than 9.1m customers, including 4.87m in Britain and 4.26m overseas.