Sky and Vodafone have formally abandoned plans to merge.

The two issued a terse statement making this clear to the New Zealand Stock Exchange on Monday. It gave no reasons but said they have withdrawn their appeal to the High Court protesting the Commerce Commission's decision earlier this year to reject their merger application. 

The marriage may be off, but the two companies remain good friends. Such good friends, that they still intend to deepen their relationship. 

An example of this came early in June when Vodafone announced it would give free Sky Sport for 12 months to customers buying Vodafone broadband and a basic Sky TV service. 

Elsewhere Vodafone mobile customers can get a deal which includes a free Sky Neon service and Sky is providing Vodafone with live coverage of All Blacks matches. The phone company is now the team's sponsor. 

In February, the Commerce Commission decided a proposed $3.5 billion merger between the two would reduce competition. 

It said Sky and Vodafone had an opportunity to create a vertically integrated business that would give a single telecommunications player access to almost all popular sports broadcasting rights. There was a fear the market power wielded by the new business would lock out other potential bidders. 

Now rivals fear the two non-merged businesses are building a form of vertical integration without all the parts being in a single company.