Orange S.A. ORAN, the largest telecom operator in France, is set to enter into an exclusive negotiation with French media behemoth Vivendi S.A. regarding partial divestment of its video sharing portal – Dailymotion. Notably, Dailymotion is currently fully controlled by Orange, which intends to sell a 80% stake to Vivendi for a consideration of €217 million (around $237 million). Orange will retain the ownership of the remaining 20% stake.
At present, Dailymotion is the second largest Internet-based video sharing platform after Google Inc. GOOGL controlled YouTube. Currently, on an average, Dailymotion generates approximately 139 million unique visitors per month compared with 1 billion visitors of YouTube. In 2014, total revenues of Dailymotion were €64 million. Since its inception in 2005, the company is yet to achieve profitability. Orange acquired Dailymotion in two phases (2011 and 2013) for a total consideration of €120 million.
Until last week, Orange was negotiating with Hong Kong-based telecom operator PCCW Group for the sale of a 49% stake in the online video portal. However, the French Government, an important stake holder of Orange, strongly argued for a European buyer. Consequently, the PCCW Group opted out of the negotiation process. Earlier, in 2013, the Government of France also turned down a proposal from Yahoo! Inc. YHOO for a 75% stake in Dailymotion.
Last month, Orange revealed the details of its 5-year strategic project called “Essential2020”. Under this plan, the company will revamp its business model to suit the needs of the different segments of its clientele. We believe that the decision to partially divest Dailymotion is part of the company’s business restructuring process.
In Feb 2015, BT Group Plc. BT had decided to acquire full control of U.K.-based wireless operator EE, which is jointly owned by Orange and Deutsche Telekom AG. The cash and stock deal is valued at GBP 12.5 billion (around $19.5 billion) and is designed in such a way that Orange will control a mere 4% of BT Group but will receive a higher cash portion, while Deutsche Telekom will obtain a 12% stake but a lesser portion of cash.
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