Etisalat is unhappy with the 25 percent revenue share demanded by Syria, London-based MEED said, citing anonymous sources close to the deal.
Etisalat was not immediately available for comment.
The bid would have been worth a minimum of $122m, MEED said.
The Syrian government has said five bidders - Etisalat, France Telecom, Qatar Telecom, Turkcell and Saudi Telecom — have qualified for the license auction. Bids are due April 12.
Syria has been crippled by growing political unrest recently in which more than 60 people have been killed so far.
Earlier this month, Etisalat scrapped a $12bn takeover of Kuwait rival Zain, citing Zain’s divided board, extended due diligence and regional unrest.
This deal would have given Etisalat a presence in Kuwait, Iraq, Bahrain, Jordan, Lebanon and Sudan.
The former monopoly already operates in 18 countries, including Saudi Arabia, India and Egypt, but faces increases competition at home where rival du now has an estimated 40 percent share of the mobile market, having launched services in 2007.
Mobile penetration in the UAE was 238 percent in 2010, more than twice the Middle East average, and is expected to reach 250 percent by 2015, Nomura wrote in a research note this week.
