Nokia is shelving plans to set up a CDMA factory with Sanyo, blaming its decision on an ongoing restructuring programme that is expected to save the company €150m (£103m). 

The two companies first announced the deal to set up a CDMA device company on 14 February 2006.

However, Nokia has decided that the terms and conditions of the proposed partnership were not satisfactory nor in the best interests of its long-term success.

"We feel it would not be in our best interests to make an agreement that proved to be less beneficial than originally anticipated," said Kai Öistämö, executive vice president for mobile phones at Nokia.

"After exploring all available opportunities and making every effort to create a sustainable CDMA business, this is our only viable option."

The company admitted that the emerging CDMA markets were looking more challenging than first expected.

"Nokia intends to selectively participate in key CDMA markets, with a special focus on North America," said the company in a statement.

Nokia will also reduce its own CDMA manufacturing and research and development by April 2007.