TNT has failed to match valuations for Royal Mail, while government officials accused it of making unreasonable demands, according to reports in The Guardian.
The newspaper also said significant progress has yet to be made between UBS - the bank appointed to orchestrate the deals - and TNT on a sale of the business. The Dutch operator is expected to shed 11,000 positions in the Netherlands as its profits halved in the first three months of 2009.
The other potential bidder, Deutsche Post, is said to be turning its gaze back on its own businesses both at home and other markets, which makes a bid unlikely, according to The Telegraph.
It goes on to report that another possible bidder, equity group CVC, could hit hurdles in acquiring the necessary finance to buy into the Royal Mail during a recession.
However, business secretary Lord Mandelson has previously said selling off a part of the Royal Mail to a strategic partner was an imperative in order to maintain the six-day-a-week, fixed price "universal postal service".
"The Royal Mail will run out of money to sustain its current universal, six-day service unless its pension fund deficit is solved and its business transformed," he said.
Deutsche Post and TNT interest cools over Royal Mail part-privatisation plans
The proposed part-privatisation of Royal Mail has hit a stumbling block after two suitors, Deutsche Post and TNT, as well as other possible bidders, reportedly curtailed their interest in the mail operator.
