British Telecommunications is reported to have made a last-minute bid for a stake in Spanish mobile phone operator Airtel, thwarting an offer made by rival Vodafone Airtouch.

BT offered to raise its current stake of 17.8% in Airtel, according to the Financial Times.

The newspaper said BT's counter offer was made to Spain's biggest bank, Banco Santander Central Hispano (BSCH), for its 30.5% holding in Airtel.

It said the bid thwarted Vodafone's £4.5bn deal which would have seen it give 5% of its equity to BSCH in exchange for its stake in Airtel. This would have made BSCH the largest shareholder in Vodafone.

A spokesman for BT refused to comment on the report saying: "We never comment on speculation of this sort."

The Financial Times quoted a Madrid banker close to the deal as saying: "The gloves are off. BT is going to fight Vodafone every inch for Airtel."

Mannesmann distraction

The news comes as Vodafone is busy concentrating on a much bigger fight to win control of German telecoms group Mannesmann.

On Thursday, Vodafone chief executive Chris Gent was in Mannesmann's home town Dusseldorf to formally launch an £83bn hostile bid for the company - the biggest in history.

Mannesmann said the offer lacked any substantial improvement on the proposal which was rejected last month.

Fight for control

BT and Vodafone both already own minority stakes of 17.8% and 21.7% respectively in Airtel which is Spain's second biggest mobile phone operator.

BSCH is the largest single investor in the company.

The Financial Times said BT may have made its move to force Vodafone to stick to an agreement between Airtel's main shareholders.

Under the terms of the agreement, any additional acquisition of equity by core shareholders must be shared out equally between other members of the group.

Industry sources says both BT and Vodafone want to control the fast-growing Airtel business which has 35% of market share in Spain.

Spain is one of the fastest growing mobile phone markets in Europe. Some 26% of the Spanish population owned a mobile phone last summer. This figure is set to explode to 42% by the end of the year.