Germans and Dutch ready to scoop up Royal Mail

[TrueBlueTerrier]

Germans and Dutch ready to scoop up Royal Mail in Mandelson's partial sell-off

http://www.thisislondon.co.uk/standard/ ... article.do

FOREIGN firms were vying to buy up large chunks of Royal Mail today after it emerged that Lord Mandelson has drafted a £3billion plan to part-privatise the service.

Under a shake-up, at least a third of the company would be sold to a private firm. Dutch-owned TNT and German-owned DHL are both keen to secure the stake.

The Business Secretary, who says he will stick by Labour's manifesto commitment not to privatise Royal Mail in this Parliament, was today publishing a report recommending a partial sell-off. The independent study by Richard Hooper, a former deputy chairman of Ofcom, calls for an overhaul of the firm which faces a multi-billion-pound pension deficit.

Up to 50,000 jobs could be lost under his advice to close half of the postal service's 71 mail centres. "Last mile" delivery is likely to remain as a public monopoly.

Email and mobile phone traffic has hit traditional "snail mail", with the number of letters falling by five million last year.

Mr Hooper recommends modernisation to maintain a "universal service" and letter deliveries six days a week. A £7billion pensions deficit may be transferred to the taxpayer. The postal regulator Postcom will be scrapped and the service will come under communications watchdog Ofcom, reflecting the rising importance of IT.

A source close to the Business Secretary said: "Our concern is to secure the Royal Mail's future, not privatise it." Lord Mandelson faces criticism from unions and Labour MPs over the plan. Billy Hayes, general secretary of the Communication Workers Union, said: "The majority of politicians and public are fed up with privatisation. We will oppose any form of it."

[F0zziebear]

DHL posted a massive loss in the US and have cut thousands of jobs. However DHL is the parcels/express part of the business whereas DHL GlobalMail (essentially a seperate entity) is the letters part of the business. Any investment would have to be sanctioned and subsidised by Deutschepost the parent company. In the current economic climate and the fact that DHL GlobalMail UK recently pulled out the domestic market makes them an unlikely investor.

TNT are far more likely and were part of discussions some years ago. However, TNT have realised that considerable investment is required in the UK to make any money (which is only from E2E). Why would they invest millions when they could expand into emerging markets and achieve much higher margins. Unless the cap on prices is lifted then I can't see anyone making a decent return. the only losers from lifting price caps will be the average customer. Oh, so you mean like with the railways, erm yes exactly!

I hear Stephen Byers is snifing in the background!

[norbert]

DHL posted a massive loss in the US and have cut thousands of jobs. However DHL is the parcels/express part of the business whereas DHL GlobalMail (essentially a seperate entity) is the letters part of the business. Any investment would have to be sanctioned and subsidised by Deutschepost the parent company. In the current economic climate and the fact that DHL GlobalMail UK recently pulled out the domestic market makes them an unlikely investor.

TNT are far more likely and were part of discussions some years ago. However, TNT have realised that considerable investment is required in the UK to make any money (which is only from E2E). Why would they invest millions when they could expand into emerging markets and achieve much higher margins. Unless the cap on prices is lifted then I can't see anyone making a decent return. the only losers from lifting price caps will be the average customer. Oh, so you mean like with the railways, erm yes exactly!

I hear Stephen Byers is snifing in the background!

Byers is the one to watch for - horrible Blairite , very dangerous .

[Geordie]

As private investment will require a return on their investment, why can't the Govt simply invest instead, so it is them that make the profit?

It would be a simple solution that keeps everyone happy

[dvbuk55]

As private investment will require a return on their investment, why can't the Govt simply invest instead, so it is them that make the profit?

It would be a simple solution that keeps everyone happy

It would appear so wouldn't it? However considering they have already invested 2.1Bn, which hasn't been spent yet, but must be part of the park and loop strategy yes I know - and the 7Bn pensions deficit - and we are still making a marginal profit, certainly marginal in terms of overall budget, it doesn't leave a lot for the Government to take a slice of.

There is however a strategy which could retain Royal Mail and that is to underwrite the 7Bn pension deficit, that would release about 800m a year to Royal Mail for investment together with the existing profit would make a nice little earner for the Treasury, even if they only took 30%. The pensions black hole has been plugged for now but is obviously the sword of damocles and will have to be addressed again.