PCCWbecame the latest high-profile Asian company to abandon plans to sell a significant stake in one of its key business units in the wake of last week's world stock market crash.

After an emergency board meeting on Sunday, Hong Kong's dominant telecommunications operator said that the market downturn had "significantly impacted" the offers received for a 45 per cent stake in HKT, a newly created holding group for most of its core fixed-line, broadband and television assets.

PCCW started the sale process in May and hired UBS to find a buyer in a deal, which was then expected to raise up to $2.5bn.

About half a dozen private equity groups including Bain, TPG, Providence, Macquarie and MBK were shortlisted for the second round, and several tabled final bids ahead of a weekend deadline.

Shares in PCCW have fallen sharply in recent weeks, partly over fears that market turmoil could affect the sale and the price.

People familiar with the thinking of some of the potential bidders said the credit markets made deal financing expensive and that the threat of a global recession had clipped PCCW's growth outlook.

One said: "There was interest in these assets but it was impossible to get close to offer what PCCW wanted. It is hard to see when this process might restart."

Alex Arena, PCCW group managing director, said: "The board was encouraged by the interest shown. However, we strongly believe that the bids received were not sufficiently attractive for us to continue this process."

PCCW said it planned to proceed with its previously announced reorganisation to create HKT and to draw down on a new HK$23.8bn (US$3.06bn) loan facility. Abandoning the sale marks the latest failure by Richard Li, PCCW chairman, to raise cash by effectively divesting some or all of the company's fixed-line assets.

An attempt to the sell the core assets to foreign private equity groups in 2006 collapsed after a $7bn-plus deal was blocked by a branch of the Chinese government.

PCCW's latest failure mirrors that of Huawei, the Chinese telecoms equipment maker, which last week shelved plans to sell control of a business unit to a foreign investor.

Asia had been regarded as a bright spot for mergers and acquisitions, but bankers said the failures underscored the difficulty of sealing deals in the region amid volatile markets. They also said that several big proposed deals by Asian groups out of the region were now on hold.