Hutchison Whampoa subsidiary 3 Italia failed to reach a merger agreement with Telecom Italia because of disagreements about price, 3 Italia's chief said.
The two firms were in merger talks but disagreed on price and market competition issues, Vincenzo Novari told newspaper Il Sole 24 Ore.
Had merger talks been successful, 3 Italia would have been broken up, said Il Sore.
3 Italia could now be sold to a Middle Eastern sovereign fund.
It may remain as an independent entity, or a non-European telecoms operator may buy a 50% stake, Mr Novari said.
Merger failure
Mr Novari said the merger with Telecom Italia was now the "least probable" option.
"The value attributed to the Telecom Italia shares was too high for us," Mr Novari told Italian newspaper Il Sore.
"There were differences on the share swap ratio ...the difference has stopped the operation," he said.
If a merger between Telecom Italia and 3 Italia had been successful, Wind, another Italian telecom operator, would have taken control of 3 Italia's customer base and technology.
The 3 Italia chief however squashed rumours that the company would be broken up, saying "new initiatives" would be launched in 2009. "We wouldn't [launch them] if we had in mind a break up of the activities," he said.
3 Italia's operations include a third generation mobile network which offers videotelephony.
^ Back to top | BBC Sport Home | BBC Homepage | Contact us | Help | ©
~RS~q~RS~~RS~z~RS~49~RS~)