PCCW ends talks with Orange over Dailymotion purchase

Hong Kong's PCCW has ended discussions with Orange about buying the telecoms group's Dailymotion video platform, just days after the French government intervened to seek alternative acquirers.

Since mid March, the Asian media and telecoms company had been poised to enter exclusive negotiations with its French counterpart over the sale of its YouTube-like business.

But, last week, France's socialist government - a 25 per cent shareholder in Orange - weighed in on the mooted sale, insisting that Orange explore "all the options" before choosing a non-European buyer.

On Monday, PCCW reacted by issuing a statement saying: "An environment where policies appear to favour a French or European solution is discouraging for international business participation. We will therefore withdraw from our discussions with Dailymotion and its current owners."

PCCW, run by Richard Li, the entrepreneur son of billionaire Li Ka-shing, is a leading mobile telecoms provider in Hong Kong. It also offers broadband, pay-TV services and a digital music streaming site. Last week, it was granted its first free-to-air TV licence in the city. However, the group has been keen to build both its digital business and its presence overseas - recently beginning to co-produce mainland Chinese TV dramas.

Despite calling off its talks over Dailymotion, PCCW said it would continue to expand its geographic reach.

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Dailymotion competes directly with Google-owned YouTube, but attracts only 128m monthly unique visitors compared with the US group's roughly 1bn.

Orange has been trying to find an international partner to help develop the site and expand it internationally for two years.

But its efforts to agree an overseas tie-up have come to grief before. In 2013, the then French industry minister Arnaud Montebourg threatened to block a proposed sale of 75 per cent of Dailymotion to Yahoo for about $200m. Last year, talks between Orange and Vivendi's Canal Plus unit over a part-stake also came to nothing.

Last Thursday, the French finance ministry stepped in ahead of the PCCW talks.

"We are not saying that we oppose the Chinese offer, there is no veto, but we want Orange to explore all the options first," it said in a statement. "All the options have to be explored first because European digital sovereignty is an important issue."

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