SSH established that the additional terms would represent excessive risk for the consortium selling almost 75% in the telecommunications provider and could lead to a cut in the purchase money.

SSH is still willing to finalise the transaction under the terms confirmed by the supervisory board on 10 June, the custodian of state equity assets announced.

SSH chairman Matej Pirc said that the bidder had just been notified of the decision, adding that an answer was expected to come soon, while no deadline had been set.

Pirc stressed that there was no chance that the procedure get suspended until the regulatory approval of the merger of Telekom's Macedonia subsidiary One with that of Telekom Austria, expected in the autumn, which which was one of Cinven's proposals.

"It is very hard to suspend such a procedure for a few months and then to continue it transparently in relation to all potential buyers," he said.

The Ministry of Finance said it understood the SSH's decision, adding that the holding "respects good business practices and the Slovenian legislation, which very clearly defines a binding bid".

The ministry said it regretted Cinven's decision to supplement the bid, while noting that the government and the SSH management and supervisors had done everything in their power to close the deal.

The response comes after Cinven insisted over the weekend that the regulatory approval of the merger be included in the terms of the deal.

While Cinven is yet to comment on SSH's decision, unofficial information from sources close to the matter say the decision signals a collapse in talks and foils what is the third attempt to privatise Telekom.

But financial analyst Matej Tomažin said that considering the many twists in the process so far, it was impossible to say yet the deal was off.

This was echoed by Igor Štemberger from the Ilirika brokerage, Cinven's partner in Slovenia, who said for Radio Slovenija that the decision did not mean that there was no will for additional negotiations and conclusion of the deal.

"I think that the answer is not bad for Cinven, if there is wish and will for the negotiations to continue. I personally hope that there will be. I see no reason for rejection or ending of negotiations," said Štemberger, adding that Cinven's response should be expected soon.

The two junior coalition partners reiterated their position regarding the sale, with Social Democrats (SD) head Dejan Židan saying that SSH would not let be blackmailed by the only bidder and adding that the offered price was too low.

Pensioners' Party (DeSUS) president Karl Erjavec added that the bidder was obviously not a strategic buyer. "The bider has shown its true face...and that it obviously only wanted to get Telekom for cheap," he told the STA.

The SSH supervisory board last week accepted Cinven's bid of 20 May but not an addendum sent on 9 June.

Cinven supplemented the bid because of what it sees as delays in the anti-trust approval of Telekom's acquisition of Debitel in Slovenia and the Macedonian operations merger.

In a letter sent to SSH at the weekend Cinven said it had made it clear from the start its offer was based on the presumption of the EUR 100m worth sale of Telekom's Macedonian subsidiary One.