Speculation broke out today that the British government might partly privatise Royal Mail byselling a holding to an investor, with Deutsche Post and TNT named as potential buyers. An official
announcement was expected late in the day.The government was due to present an official report on the future of Royal Mail toParliament. The report has been drawn up by a committee under Richard Hooper, a former deputy headof the public watchdog on the communications industry.
The Daily Telegraph newspaper reported today that the report would call for a radicalresponse to Royal Mail’s falling profits and huge pensions deficit. The British government wasconsidering selling “a large stake” of about one third in the struggling national postal service toa foreign company, it wrote.
TNT and Deutsche Post are competing in a deal worth about £3 billion (€3.3 billion), thenewspaper said. TNT was seen as the favourite, it added, citing insiders.
The Times, which also said the report favoured opening Royal Mail to private investors, addedthat the network should be downsized by closing half of the 71 sorting centres. This could mean50,000 job losses out of the total workforce of 170,000, it added.
The Financial Times wrote that the report says Royal Mail, which is inefficient in comparisonwith other European postal operators, needs a large injection of capital to finance modernisationmeasures.
The government declined to comment ahead of the report’s official presentation, but a sourcesaid the government’s concern was “to save Royal Mail and secure its future, not privatise it”. Theruling Labour Party has committed itself not to privatise the postal operator.
Royal Mail has lost substantial business and market share since full liberalisation of thedomestic mail market in 2006 and due to the electronic substitution of traditional written andprinted correspondence. It is also burdened with a heavy pensions deficit which was put at £3.4billion for 2006.
