French telecom operator Iliad said today that Vodafone had rejected a sweetened proposal to merge their Italian businesses, and it would "fiercely pursue" market share as a standalone operator.
Vodafone confirmed the end of talks with Iliad, but it said it was continuing to pursue other options for a deal in Italy.
Its shares fell 3.3%.
Iliad said in December it had submitted a proposal to Vodafone to merge the Italian units, a move that would have combined its fast-growing consumer base with the British company's strength in business in a highly competitive market.
Vodafone said at the time it was exploring options with several parties, potentially including a merger or a disposal.
One of them was a potential deal with Swisscom's Fastweb Italian unit, sources familiar with the matter said.
A Vodafone spokesperson said today: "We are no longer in talks with Iliad, but our discussions with others continue."
Iliad, which owns a large stake in eir, increased its offer by €100m to €6.6 billion in cash, with Vodafone also receiving €2 billion of a shareholder loan.
Iliad would have received €400m in cash - €100m less than originally proposed - and also €2 billion of a shareholder loan, it said.
"The Iliad Group is confident that the offer presented was the best possible business combination to benefit a struggling Italian market and telecommunications industry," Iliad said.
