La Poste needs to raise at least €2.7 billion as part of planned total investments of up to €9billion during 2009-2012, according to a French government-commissioned report published yesterday.
As reported by French media last week, the Ailleret commission concluded that the postalgroup needed substantial external financing in order to be able to make necessary investment inmail modernisation, network expansion and express/parcels acquisitions during the next four years.
Faced with the challenges from electronic substitution of mail volumes and full Europeanpostal liberalisation in 2011, the postal operator had to grow by expanding its offers and itsEuropean presence. The status quo is “inacceptable”, it said.
But the commission effectively killed off La Poste’s ambition of a share placement in 2010 or2011. “In the context of the financial crisis, the hypothesis of an appeal to private investors isneither desirable nor credible,” the commission stated. “Privatisation is excluded,” it declared.
Instead, La Poste should remain 100% state-owned but its capital could be opened topublicly-owned financial investors such as the Caisse des depots et consignations (CDC). Thecommission supported the legal transformation of La Poste into a limited company in order tofacilitate the capital investment.
Detailing La Poste’s investment plans for 2009-2012, the commission reported that the postaloperator planned to spend €2.25-2.5 billion on its mail operations, between €1.7 billion and €1.85billion in expanding its express/parcels activities, €1.4 billion in the post office network and€1-2 billion to grow its financial business La Banque Postale.
The commission said that La Poste would certainly have to invest at least €6.3 billion out ofthese spending plans, which ranged from a total of €7.35 billion to €9 billion. Based onexpectations that the postal operator would only be able to finance €3.6 billion out of its ownfunds, a further €2.7 billion at least would therefore be needed, it said.
In view of debts of about €6 billion as of end-2008, the option of further debts should beexcluded, the commission said. It also rejected the option of scaling back the planned investmentssince this would inevitably mean La Poste would decline and lose market share in the future.
The express/parcels sector is a “major growth factor” for La Poste and its “principal mode ofinternationalisation”, the commission pointed out. La Poste should aim to become a European marketleader and have the “financial capacity” to grow its presence, it said. Its European network is notyet fully consolidated, the commission noted.
Expansion in fast-growing markets outside Europe is “an opportunity” requiring in-depthexamination on a case-by-case basis, it added. The successful policy of international alliancesshould be continued, it recommended.
La Poste has estimated it requires between €1.1 billion and €1.25 billion for express/parcelsgrowth during 2009-2012, with the bulk for acquisitions in Europe, the commission stated. A further€600 million is planned for the domestic French network, mostly for the ColiPoste B2C business.
Addressing the group’s international postal expansion plans, the report said La Poste wantsto invest €500 – 800 million during 2009-2012 in cross-border mail, “cooperation opportunities”with other postal operators and building up a European mail network. But La Poste should be “cautious” on this front due to various risks, the commission said.
The French prime minister François Fillon, whose office published the full report, issued astatement saying that he would consider the commission’s findings and make recommendations toFrench president Nicolas Sarkozy “in the near future”. The government wanted “to give La Poste allthe necessary means and tools for its development” while maintaining its “public character”, therights and status of employees, and its “public service missions”.
