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lh UPDATE 1-Orange drops French telecoms deal-making plans

(Adds context, comment from source familiar with the matter)

PARIS, July 2 (Reuters) - Orange has ditched plans to take part in any tie-ups in the French telecoms market, the former monopoly said on Wednesday.

Orange said in May it was examining what role it could play in such deal-making, and sources told Reuters that it had held informal talks with third-place mobile operator Bouygues Telecom .

"Orange... believes that it cannot pursue this avenue at the present time as the conditions that the group has set have not been met," the company said in a statement.

A source familiar with the matter said Bouygues was seeking too high a price for its telecom unit. To appease potential antitrust concerns, Orange had also tried to bring in upstart operator Iliad into the talks but the three parties could not find a common ground.

"The discussions are over," the source said.

Bouygues and Iliad could not immediately be reached for comment.

Economy Minister Arnaud Montebourg has said the government - which holds a 27 percent stake in Orange - wants to reduce the number of telecom players to three from four as tough competition in the sector is hurting jobs and investment in high-speed broadband.

(Reporting by Gwenaelle Barzic; Writing by Natalie Huet; Editing by Miral Fahmy and Louise Heavens)