Cash-rich China Mobile will continue its search for overseas assets in spite of its eleventh-hour decision to abort a $5.3bn bid for Millicom International Cellular, according to sources close to the company.

This week’s surprise collapse of talks between China Mobile, the state-owned operator, and Millicom, a Nasdaq-listed company focused on emerging markets, renewed fears that the Chinese company was struggling to build an international presence.

A takeover of Millicom would have been the largest overseas acquisition by a Chinese company and the aborted bid leaves China Mobile with an unexpected extra $5.3bn of cash on its books.

Last year China Mobile, the world’s largest mobile operator with a claimed 264m subscribers, failed in a bid to acquire a stake in Pakistan Telecommunications. However, it did later acquire China Resources Peoples, a Hong Kong-based mobile operator.

But one person close to China Mobile said: “This company is still very much seeking to bulk up its operations with overseas acquisitions. This deal ended because China Mobile was disciplined about what it was prepared to pay for what is a disparate collection of assets.”

Millicom operates in 16 countries including Ghana, Paraguay and Cambodia and it is understood that China Mobile’s ambitions to acquire the Luxembourg-based company cooled following recent country site visits by senior executives to assess the assets.

One person said: “Having visited the countries and realised how difficult it would be to manage them, China Mobile felt that it could not continue to justify a $48-a-share bid.” Millicom shares fell 25 per cent to below $34 each after it announced that talks had ended.

People on the two sides disagreed over whether China Mobile’s board had decided on Sunday to withdraw from talks and faxed its decision to Millicom, or whether Millicom had issued its statement withdrawing from negotiations first, before China Mobile sent an e-mail saying it could not strike a deal at the previously agreed price.

Millicom claimed on Monday night that the talks ended because it had concluded that China Mobile would not be in a position within an acceptable timeframe to make a binding offer that it found sufficiently attractive.

China Mobile and Merrill Lynch, its adviser, on Tuesday declined to comment.

Analysts said China Mobile’s decision not to acquire Millicom was not a setback as the price was too high. Kelvin Ho, an analyst at Nomura, said: “It’s a good thing that China Mobile did not go ahead. Millicom could have been good for them but it was too expensive.”

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