The San Francisco-based firm is currently facing two offers, one of $48bn from the largest regional phone company in the US, Bell Atlantic, and $55m from Britain's biggest mobile phone company, Vodafone.

Sam Ginn, chief executive and chairman of Airtouch, can smile while he watches the bidding war

Airtouch serves 35m customers around the world and its operations would nicely complement the business of both Bell and Vodafone.

But several other companies are rumoured to be ready with rival bids. One of them is MCI WorldCom, the world's fastest growing telecoms company. However, late on Friday MCI said it was "currently" not interested in a deal.

Nonetheless, analysts predict that the bidding war could escalate, given AirTouch's global position in the lucrative telecoms sector. "The strategic appeal of AirTouch is such that you can see it appealing to more than two players," one said.

Potential suitors mentioned on the markets are British Telecom, Atlanta-based BellSouth Corporation and Germany's Mannesman. All three have described the reports as "pure rumour and speculation" or declined to comment.

British Telecom is certainly an unlikely candidate, as any Airtouch deal would threaten its recent link-up with AT&T, the dominant long-distance carrier in the US.

Vodafone negotiations

Record numbers of suscribers are signing up with Vodafone

A negotiating team from Vodafone met Airtouch officials last week and will report the results back to London on Monday, when Vodafone's chief executive Chris Gent returns from a working holiday in Australia and New Zealand.

Vodafone and Airtouch are already business partners in Egypt and Sweden and co-operate on Globalstar, a satellite-based mobile-phone system.

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

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

Bell Atlantic chairman Ivan Seidenberg wants to use Airtouch to break into the market in the western US

If the deal with Bell goes through it would create a west-to-east coast link-up for the 61m users in the US and put pressure on AT&T to lower its prices.

Tim O'Neil, analyst at SoundView Technology Group, said a full link-up with Airtouch would make "sense strategically" for both Vodafone and Bell Atlantic.

Industry consolidation

Around the world telecommunication markets have become more competitive, with sometimes three, four or more companies vying for subscribers. As profit margins fall, experts predict a consolidation in the industry that will see only large international operators survive.

The telecoms sector is enjoying a boom period - and increasing competition

The fight over Airtouch has fuelled these expectations. As a result share prices of telecoms companies have increased across the board.

Blaine Tatum of Commerzbank says: "What we have seen is that a sniff of M&A (mergers and acquisitions) is driving all the telecoms stocks up."

Especially many UK telecoms companies are considered to be prime takeover targets. With 150 firms the UK has more operators than Italy, Germany and France combined.

Already shares in mobile phone company Orange and in Energis - part of National Grid Group - have risen sharply and there is new interest in cable company Telewest Communications.

Cable & Wireless

The most attention, though, is paid to Cable & Wireless, the UK telecom company with strong interests in Hong Kong. Since C&W surprisingly lost its successful chief executive Dick Brown to computer services giant EDS in December, the company appeared more than ready for a takeover.

Germany's recently privatised Deutsche Telekom is reported to be interested in C&W, triggering a 9.7% rise in Cable and Wireless shares last Friday.

Both companies declined to comment, but one analyst said he was 95% certain that C&W had put itself up for sale.

As hard information on any of these deals is scarce, investors and analysts are getting increasingly frustrated. One market watcher said: "All these companies, whose share prices are being swept up on the back of market rumours, are not giving any information to investors at all. These share prices are running on vapour right now."

The world's telecoms industries are firmly in the grip of merger mania.