* KKR and Affinity Equity Partners quit bids for Vocus
* Vocus shares slide 20 pct to 3-month low
* Neither bidder gives reason for exit (Adds analyst and fund manager quote, sector detail and shares)
By Tom Westbrook
SYDNEY, Aug 21 (Reuters) - Private equity suitors Kohlberg Kravis Roberts & Co and Affinity Equity Partners pulled bids for Australian telco Vocus Group Ltd on Monday, four days after the company's third profit warning in nine months.
Neither firm gave a reason for walking away from their separate but matching A$2.2 billion ($1.74 billion) bids for Australia's fourth-biggest internet company.
The end of their pursuit sent Vocus shares sliding 24.5 percent to a three-month low, and comes as headwinds strengthen across a sector upended by the rollout of a new government-owned National Broadband Network (NBN).
"A bit of the euphoria of the NBN has now gone," said telecommunications analyst Paul Budde, who runs his own consultancy.
"The underlying trend has continued: It's a slow decline of margins."
KKR had also previously said its bid was subject to "customary deal protections" including no adverse change in the company's performance.
Vocus last week said it would miss its net profit target for fiscal 2017 - which it reports on Wednesday - and booked a A$1.53 billion impairment charge, citing tough market conditions.
The Sydney-based company has struggled to make the most of acquisitions bought in a three-year, $2.4 billion shopping spree, in anticipation that the NBN would shake up market share in a sector dominated by behemoth Telstra Corp Ltd.
Instead, aggressive discounting has trimmed service providers' margins without driving many customers to change internet companies.
On Monday, Vocus said "all discussions have now ceased" with the bidders after both advised that they were unable to meet the board's terms following due diligence.
KKR declined to provide a reason for its withdrawal and a spokesman for Affinity Equity Partners (S) Pte Ltd did not respond to a request for comment.
Shares in Vocus dropped as much as 24 percent in morning trade to their lowest intraday level since May, while the broader market was down 0.5 percent. The stock's trading price of A$2.70 compared with the A$3.50-per-share offered by both bidders - and its 2016 high of A$9.40.
David Pace, portfolio manager at Vocus's biggest shareholder Greencape Capital, said the deal's collapse did not change his view on the company.
"We continue to believe that the organisation has made material inroads into turning around and remain positively disposed to the story," he said in an email. ($1 = 1.2625 Australian dollars) (Reporting by Tom Westbrook; Additional reporting by Christina Martin BENGALURU; Editing by Stephen Coates)