An auction by owners Cable & Wireless and US-based MediaOne Group collapsed after France Telecom and Germany's Mannesmann refused to meet an asking price of £11bn ($17.3bn), the Financial Times newspaper reported on Wednesday.

Mannesman confirmed it was pulling out of the bidding, after refusing to bid more than £8bn.

France Telecom could not be contacted because of the French Bastille Day holiday, but is believed to have pulled out after offering a similar sum.

Floatation considered

The withdrawals mean that all five leading potential buyers have now backed out of the auction.

Deutsche Telekom, Telecom Italia and France's Vivendi withdrew earlier this month.

A spokesman for Mannesmann said: "The UK market is very attractive and we have always said we were interested in it, but not at any price."

The owners of One-2-One are now thought to consider floating the company on the stock market, hoping that investor interest in the telecom sector will help them to meet the asking price.

However, fund managers warned that the company may find it difficult to meet its target.

Market success

Adrian Darley, of Gartmore Investment, said: "If they think now they are going to get £11bn through some kind of flotation, they are going to be disappointed"

Other European mobile phone groups have been successful going to the market.

Shares in Sweden's Europolitan rose by nearly 400% in the last two years, while Telecom Italia Mobile doubled its share price in the last 21 months.

One-2-One is the smallest of the UK's four mobile phone operators. with 2.65m customers.

Its turnover in the last financial year improved by 43% to £781m, but the company is not making any profit yet.