France Telecom and TDC have abandoned plans to combine their Swiss mobile units, after succumbing to regulatory pressure.
Swedish regulators in April blocked the deal, and an appeal to have the ban overturned fell on deaf ears.
After a detailed analysis of the regulatory situation, the companies have “concluded that the possibility of a merger is non-existent,” TDC CEO Henrik Poulsen said in a statement. “We will therefore not pursue this option.”
Poulsen said that TDC will instead focus on developing its Swiss unit Sunrise.
But the hurdle has been a spanner in the works for TDC's plans to sell off its assets outside its core Nordic operations, and then conduct a large share sale.
France Telecom meanwhile has a track record of forming joint ventures in the more mature European markets, and hoped to do the same with its unit Orange Suisse.
But in this case, consolidation would have a substantial detrimental effect on competition in the Swiss mobile market, Swiss regulators had determined.
Orange Suisse and Sunrise have respective market shares of 17.3% and 20.6%, while incumbent Swisscom has a more than 60% share.
Just this week, rival Swisscom said it supported the merger, with spokesman Josef Huber telling WSJ that the company would “rather have more competition than more regulation.”