A rush of blood in Cannes

WHAT FUN the telecoms groups are having at their annual jamboree in Cannes. There may be fewer starlets draped across the beaches than during the film festival, but the same tingle of excitement, brought on by dreams of multi-billion takeover deals and fat cash-ins of share options, have emotions running high.

Nowhere are the senses more heightened than at mmO2. Until recently, the former BT Cellnet was considered one of the weaker players in the industry. Not any longer. Orange, once considered the main innovator in European telecoms, has lost a great deal of its marketing zest since falling under the dead hand of state-controlled France Telecom.

MmO2, freed of BT, has become an unrecognisable animal. Chief executive Peter Erskine has played the underdog role well, forging deals that have transformed its image and cast it as a growth company. Its Airwave deals, linking police across Britain, looks like becoming a standard for emergency services.

A partnership with Tesco has yielded 200,000 new subscribers in a matter of months. And, as the third player in the German mobile market it has done surprisingly well.

Recognition of all of this, together with the revival in telecoms shares, partly sparked by the AT&T Wireless auction in the US, suddenly has made mmO2 an attractive bid candidate.

Shares that stood at 48p not so long ago have raced through the 100p barrier and rose 20% in Monday trading. A rejected bid by KPN, which itself produced some bright figures on Monday, has sparked a belief in a bidding war.

For long-suffering BT/mmO2 shareholders (including this writer) this is an unexpected bonus. The brokers are up to their usual tricks, suddenly finding value where they could not see it before.

A series of notes just issued, in the wake of the KPN offer, believes that there is a take-out price for mmO2 of anything ranging from 110p to 125p. Certainly something near the top end of the range would be enough to bring the mmO2 board on side.

The company would not have to think so hard about creating new alliances and making the best of 3G licences with the Vodafone elephant looking over its shoulder.

It is proving an exhilarating moment for those who have stuck with the telecoms sector through the bad years. But would-be buyers of assets need to keep their feet on the ground and beware of investment banks putting inflated values on untested propositions.

ITV choice

THE biggest guessing game in the City this week is who will be the next chairman of ITV. After the revolt that sent Sir Ian Prosser packing at grocers J Sainsbury, Sir Brian Pitman and John McGrath - the senior non-executives at the new unified commercial broadcaster - are not going to be taking any chances.

But it is a bit rum that after a lengthy search, neither of the top candidates looks a perfect fit. Soon-to-depart Tesco chairman John Gardiner has an impressive career, including a stint in journalism. But at 67, appointing him would hardly be a vote in the future in a television industry that is in the middle of a digital revolution.

The feeling is that Gardiner may have the edge over former Bank of Scotland chief executive Sir Peter Burt, who found there was not enough room at the top for him after the merger with Halifax to create HBOS.

Burt, interestingly, has never been scared of the unknown. He once contemplated getting into bed with Pat Robertson, the king of Christian broadcasting in the United States, before the deal was blasted off the air by the American broadcaster's homophobic and anti-Scottish rants.

Burt also drew the first blood in the battle for NatWest before being beaten to the punch by Edinburgh rival Royal Bank of Scotland.

One of his final big deals at BoS was to back Richard Desmond in the financing of his purchase of Express Newspapers - a deal that demonstrated he makes no distinction between the Fantasy Channel and Christian Broadcasting.

No doubt the wise heads at ITV and among the institutional investors will be taking all of these factors into account. If they said neither of the above, it might be quite understandable.

Durlacher fright

A REPORT entitled 'Bubble Trouble' on Britain's booming housing market arrives from broker Durlacher. This is a subject on which Durlacher is a world expert.

In February 2000, the broker's shares reached an astonishing £580 as dotcom mania reached its zenith, valuing the firm at £2bn. Now it is worth £14m.

Were the housing bubble to deflate at the same rate a £200,000 flat would cost £480. Now that is scary!