PARIS (Reuters) - Leading French telecoms company Orange said it was interested in working with Canal Plus on acquiring sports rights rather than trying to buy a stake in the pay TV business.
The two had been discussing a possible move by Orange to buy into Canal Plus, owned by media giant Vivendi, according to sources close to the matter.
However, Orange Chief Executive Stephane Richard indicated a change of tack on Thursday.
"No, I don't want to buy Canal Plus," Richard said in an interview with BFM Business radio station.
"Orange and Canal Plus are important partners. Can we do more together? For sure, but on a industrial and commercial basis, not through a stake acquisition."
Following speculation on a possible resumption of broader talks to cut the number of French telecoms operators to three from four, Richard told reporters there were "driving forces" in favour of consolidation, but that no formal talks were taking place.
The last merger attempt between Orange and Bouygues's telecoms business fell apart in April last year.
Richard was speaking after Orange reported a 1.3 percent increase in its yearly core operating profit, helped by strong sales in Spain and a reduction in labour costs.
Bouygues, which also reported its full-year earnings on Thursday, said that a robust performance at its telecoms arm showed that the business can thrive on its own.
Richard's comments highlight the difficulties the company has faced in a rapidly-changing sector, which faces new competition from Netflix, Amazon and other new TV content providers globally.
Telecoms companies such as BT in Britain have invested heavily in sports rights to broaden their appeal to customers. However, Orange, which has a distribution agreement with Canal Plus, has little such content of its own.
French business newspaper Les Echos reported this month that Orange and Canal Plus could set up a commercial venture to address strong competition from SFR Group, the country's second-biggest telecoms operator.
"Everybody knows that there's one player relatively aggressive in building an offer in sports rights," Richard told financial analysts in an apparent reference to SFR which has bought rights to show English Premier League soccer in France.
Canal Plus shows matches from France's Ligue 1 and European Champions League soccer, while Qatar-controlled beIN Sports also has a share of the rights.
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Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by Sudip Kar-Gupta and Keith Weir