Halfpenny has missed several crucial games for the club through injury and international commitments, including this month's Top 14 final defeat to Clermont Auvergne when he was on Lions duty in New Zealand.
"I did not want to extend it [Halfpenny's contract]," Boudjellal told French news outlet RMC Sport.
"It is not for nothing. It is the fault of the international system and internationals, being absent too often.
"If he had stayed he would have returned in early August and missed the first three games because he could not have played for a month."
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Halfpenny, who has 71 caps for Wales, won the European Cup with Toulon in 2015 but sustained a serious knee injury while playing for Wales later that year that led to him being sidelined for nine months and missing the World Cup.
Boudjellal threatened to tear up Halfpenny's contract on medical grounds in 2014 because of his recurrent injuries but the matter was resolved after talks between the club and the player's agent.
(Reporting by Aditi Prakash in Bengaluru, editing by Nick Mulvenney)
