AirTouch-Bell Atlantic-Vodafone: a ménage-à-trois made in heaven

US mobile firm, AirTouch is holding takeover talks with both Bell Atlantic and Vodafone. A straight fight looks to be on the cards, but as Tony Hallett argues, a compromise could be the best deal for all parties

This week's speculation about the sale of US mobile network operator, AirTouch has turned to a possible bidding war between two possible suitors.

Bell Atlantic (BA), the US Baby Bell that serves most of the North-East of the country, covets AirTouch because a stronger mobile business would allow it to challenge AT&T, Nextel Communications and Sprint PCS Group as a nationwide provider of wireless services.

Vodafone, another giant mobile network operator in its own right - both in the UK and overseas - was said to be in talks with AirTouch last quarter, and rumours surrounding the two companies stretch back as far as 1997. AirTouch's international assets would complement those of Vodafone, turning the Newbury-based firm into the first truly pan-European cellular operator.

It's those kind of economies of scale that are reportedly behind a Vodafone executive team - including chief executive Chris Gent, fresh from watching a Vodafone-sponsored England cricket team in Australia - rushing to talk once again with AirTouch. Vodafone is rumoured to be willing to pay $90 for each AirTouch share, valuing the company at about $54bn. BA's offer works out at about $43bn.

So who will win? Well, there's a chance both companies will. Forget about a tug of love: think ménage-à-trois.

BA wants to challenge the big, national US telcos. But unlike competitors such as Ameritech, AT&T, and MCI WorldCom, it doesn't have a big presence outside the US. Its priority is getting permission to compete against the US long-distance carriers after proving it has opened its parochial market.

It also has its hands tied because it is slated to merge with GTE, the far-reaching local provider which also has a mobile business, in a deal that will cost it $77.9bn.

Vodafone, on the other hand, is involved with second tie