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* Says found no offer matching future value of Yoigo
* Says Yoigo has great potential
* Setback for hopes of market consolidation - analysts
By Anna Ringstrom and Olof Swahnberg
STOCKHOLM, April 2 (Reuters) - Sweden's TeliaSonera has scrapped plans to sell its fast-growing budgetSpanish mobile operator Yoigo after failing to attract highenough bids, signalling no let up in competition in a depressedmarket.
Large Spanish mobile firms like Telefonica andVodafone have lost clients to smaller, often lower-costones like Yoigo as cash-strapped consumers have searched forcheaper offers.
Industry sources told Reuters last year that Vodafone andFrance Telecom would be natural bidders forTeliaSonera's 76.6 percent stake in Yoigo, which they said theSwedish firm was hoping could fetch around 1 billion euros ($1.3billion).
"Whilst this news will have no impact on our (TeliaSonera)forecasts which assumed the status quo, it will likely beinterpreted negatively for Telefonica, Vodafone and FranceTelecom," Espirito Santo analysts said in a note to clients.
"There had been high hopes for consolidation and thepotential for market repair in the Spanish mobile market."
TeliaSonera, which was looking to focus on its otherbusinesses which are mostly not at the budget end of the market,declined to say what prices it had been offered for Yoigo andsaid it remained committed to the business.
"Yoigo has great potential for further development, but asits market strategy does not quite match our other operations,we have been prepared to divest it if we were offered a pricewhich fully reflects its future potential," TeliaSonera ChiefExecutive Per-Arne Blomquist said on Tuesday.
"As this requirement has not been met, we have discontinuedthe sales process and look forward to continue developing thecompany."
Yoigo's sales grew 13 percent in local currency in 2012 tothe equivalent of 8.4 billion Swedish crowns ($1.3 billion)while operating profit before amortisation and depreciation atthe firm, which struggled with losses previously, soared 49percent to 627 million.
Yoigo, Spain's fourth-biggest operator, gained 85,000 newclients in January, taking its market share to 6.6 percent,while former monopoly Telefonica shed 243,000 customers.
In an increasingly competitive market where 2.8 millionSpaniards ditched their phones in 2012, Yoigo has undercutcompetitors with deals like "The One" offering 1 gigabyte ofInternet usage and calls at 1 cent a minute for 9 euros a month.
Shares in TeliaSonera, which has a market value of 202billion crowns ($31 billion), were up 0.5 percent at 0945 GMT,broadly in line with the wider European stock index.Telefonica shares were down 0.7 percent, while Vodafone's wereup 4.6 percent and France Telecom's up 1.6 percent.
Stefan Olsson, analyst at Alandsbanken, said he was notsurprised TeliaSonera had abandoned the sales process.
"Spain is a pretty tough market right now so maybe thetiming is simply wrong for getting a price tag that isattractive enough," he said.
