Vodafone and Verizon Communications discussed a full merger as recently as December but a buyout or partial sale of the UK operator’s stake in Verizon Wireless is a more likely approach to resolving the long-running issue of future ownership of the joint venture, according to Bloomberg.

Talks about a merger failed because the two companies could not reach agreement on leadership of the combined entity, as well as the location of its headquarters, said the report which cited two people familiar with the negotiations.

No formal discussions of a merger are ongoing and talks about a possible purchase of Vodafone’s 45 per cent stake in Verizon Wireless are not believed to be at a “substantial” stage. Negotiations are likely to resume later this year.

Merger talks have been “on and off every few months for at least two years” and reached the point of joint working groups being set up to identify possible cost savings, according to one source. McKinsey was on board to look for potential synergies from a merger. The consulting firm did not comment.

Among the scenarios under consideration was a merged entity based in the UK and led by Verizon CEO Lowell McAdam. Being based in the UK would hold tax advantages.  Verizon shareholders would have held approximately 55 per cent to 60 per cent under this scenario.

The reason that talks rose up the agenda in 2012 was due to support from leading shareholders and an increase in Verizon’s market capitalisation as it edged closer to Vodafone’s. This meant the deal could have been portrayed as a merger of equals.

However, Verizon was reportedly reluctant to see the combined entity’s headquarters located in Europe. And Vittorio Colao, Vodafone’s CEO, did not want to stand aside for McAdam. Plus, Bloomberg suggests the US company was lukewarm on retaining some of Vodafone’s assets, such as its Indian operator.