Vodafone and Liberty Global have abandoned talks about a swap of business assets in Europe's converging mobile phone, broadband and TV markets, they said, having failed to agree on valuations.
Vodafone, the world's second-biggest mobile operator, said in June it was considering swapping some assets with Europe's biggest cable company, but denied persistent rumours that the two were looking at an outright merger to enable them to better compete as mobile and fixed-line broadband markets converge.
Both sides confirmed the negotiations had been terminated today, without commenting further.
However, bankers said the logic of a tie-up between the two groups was intact and did not rule out the prospect of Vodafone feeling compelled to buy all of Liberty.
Sources close to the discussions said the latest talks foundered on valuing the assets on both sides.
"We have not got there today, but we are not closing the door on potential discussions in the future," one person said.
Vodafone was thought to have put a number of proposals on the table but was unable to bridge the valuation gap, another said.
Liberty Chairman John Malone, who saw the companies as a "great fit", had already said earlier this month they were struggling to progress with the plan, telling Bloomberg that "conceptually there could be some real value created but realistically we haven't been able to figure out a way to do that that's mutually successful".
Shares in Vodafone, which had fallen 10% since the talks were revealed in June, were trading down 3.6% at 210 pence at 2.40pm, while Liberty Global's share price, down 8% in the same period, was down 4% at $46.