Broadband internet supplier Chello, owned by Dutch cable giant UPC, has called off its plans to merge with the international arm of similar US group Excite@Home.

The move raises questions about future funding for Chello, which had been scheduled to float before UPC decided on the merger with Excite instead. UPC is now expected to combine Chello with its interactive TV subsidiary, UPC Media.

UPC chairman and CEO Mark Schneider said in a statement: "This has been a complex transaction with a number of difficult business issues to resolve. Although both parties worked hard to resolve the outstanding issues, we were unable to reach agreement."

The merged Excite Chello would have had operations in 15 countries and a market value of some Euros5.5bn. Liberty Media, which has a controlling stake in UPC, and Microsoft, were both expected to invest in the venture.