France Telecom ( FTE) confirmed it is in talks with Amsterdam-based Equant ( ENT) about a possible alliance, but the French company said a transaction is unlikely in current market conditions.

There were reports earlier Wednesday that France Telecom was close to an agreement to pay $10 billion for Equant and merge it with its own Global One unit. According to these reports, the companies were in talks earlier this summer, but broke them off when they couldn't agree upon a price.

According to the reports, the deal would first call for France Telecom to put about $1.2 billion into Global One and eliminate its long-term debt. Then Equant would acquire Global One in a stock deal. And in the final step, France Telecom would buy the 35% stake owned by a consortium of airlines, called SITA Foundation, which would give the French carrier a controlling position in the company.