Negotiations fell through after both parties failed to agree on the value of Bouygues' telecoms unit as well as its stake in Orange.
“After three months of discussions with Orange, it was not possible to find agreement on all of these points,” said Bouygues.
Bouygues is said to have sought 15% of Orange’s share but the French government, which owns 23%, wanted to retain a dominant stake.
A merger would have reduced the number of operators in France from four to three. Competition in France has risen since Iliad launched its low cost service Free Mobile in 2012, unleashing a price war in the country.
