Gent will have an uphill battle, however, as Mannesmann strongly denied suggestions that its resolve is waning to fight off the hostile bid from Vodafone AirTouch. "The speculation in the press about friendly negotiations between Mannesmann and Vodafone AirTouch is without substance," said Klaus Esser, chairman of Mannesmann's executive board. Rumours had circulated in the financial markets that the two companies had begun secret talks aimed at carving out some kind of friendly merger.

A takeover would give Vodafone (VOD)-already the world's largest mobile phone company and a key partner withMannesmann in several European markets-42 million customers and a pole position in the race to offer wireless data and voice services worldwide.

Relations between the two companies' executives have become frosty since Esser rejected an initial 203 euros per share offer from Vodafone CEO Chris Gent. That rejection prompted the British firm to plow ahead with its hostile offer, now worth 255 euros per share, directly to shareholders. The deal, valued at 132 billion euros ($145 billion), would be the world's largest takeover.

However, a blunt statement by Esser appears to rule out the prospect of a negotiated settlement: "The hostile offer by Vodafone does not provide a basis for discussion.

The offer has been rejected as inadequate and there has been no change in this respect." Vodafone said it was disappointed, but not surprised, at the statement, although a spokesman said the door remained open to Mannesmann which makes everything from automotive parts to telecommunications gear-for furthertalks.

"We hope that the supervisory board will consider our proposal more dispassionately," the spokesman added. Management's supervisory board is due to meet Sunday to discuss the situation further.

Vodafone's interest in deepening ties with Mannesmann-they each hold stakes in German cellular network D2 and Italy's No 2 mobile operator Omnitel-was sparked when the German firm made a surprise takeover of Britain's Orange (ORA).

Orange is one of Vodafone's principal rivals in the British market. Separately, Vodafone is considering a $7.6 billion bid to take control of Spain's second cellular operator, Airtel. Under the deal, Vodafone may exchange 5 per cent of its own shares for the 30.45 per cent of Airtel held by Banco Santander Central Hispano, the country's biggest bank.

Vodafone already owns 22 per cent of Airtel. If Vodafone does take its holding over 50 per cent it would foil the ambitions of domestic rival British Telecom (BTY), which owns 18 per cent of Airtel, and apparently would like toown more. If the deal goes through, it would value the entirety of Airtel at $25 billion, substantially more than previously anticipated. Airtel has one-third of Spain's booming cellular market, and had more than 4 million subscribers in October.

Vodafone stock was fell at 3 pence on Friday to close at 297 on the London stock exchange, while Mannesmann shares slipped 1.10 euros Frankfurt to 201.70.