France Telecom and Denmark’s TDC have abandoned the planned merger of their mobile networks in Switzerland. The two companies had last month appealed against a decision by the Swiss regulator to block the deal on competition grounds, but conceded defeat in a joint statement yesterday. The companies said that they had “concluded a detailed analysis of their available options and, as a consequence hereof, terminated their agreement concerning the proposed business combination.” The merger – between France Telecom’s Orange Switzerland and TDC’s Sunrise – would have created an operator with approximately 3.4 million mobile and 1.1 million fixed and broadband customers, accounting for a 38 percent share of the Swiss mobile market and 13 percent of the country’s fixed broadband connections. It would have provided a strong challenge to market-leader Swisscom, but the regulator ruled in April that turning the market into a duopoly would have kept prices high for consumers.

According to a Financial Times report today, the collapse of the deal could have consequences for both parties. TDC delayed a large share sale until later this year after the Swiss regulator’s decision disrupted its strategy of disposing of its non-Nordic assets. TDC’s private-equity owners began a strategic review of the Danish group last year and it was widely expected to conclude in a share sale. Meanwhile, the abandoned Swiss tie-up also raises questions about France Telecom’s strategy of consolidation in mature European markets where it is actively looking at joint ventures with other operators to cut costs. Its recent merger with T-Mobile in the UK was passed by regulators.