British Telecom and Vodafone held inconclusive talks last year to clear out some continental European holdings with a £3bn sterling asset swap, according to a report in the Daily Telegraph.
The Telegraph said BT would have handed Vodafone its 26% stake in Cegetel, operator of France's second largest mobile firm, in exchange for Arcor, Germany's second largest fixed line business.
Arcor minority shareholder Deutsche Bahn had said last week that it was close to an agreement with Vodafone that would allow for a sale or flotation of the non-core German unit, in which Vodafone holds a 74%.
BT confirmed several weeks ago that it wanted to get out of Cegetel, but a spokesman today declined to comment further.
But the newspaper quoted a source close to BT as saying that while such a deal might have made sense last year, BT's retrenchment to Britain to help bring down its debt meant another continental holding was less likely now.
