Poste Italiane calls for review of universal service funding

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Poste Italiane has demanded a review into the way Italy’s universal postal service is funded, after the communications regulator granted it half the funding requested to cover the years 2011 and 2012.

The Italian national postal service had requested EUR 709m for 2011 and EUR 704m for 2012, to cover the shortfall in funding for the nationwide one-price-goes-everywhere universal service, compared to the income the service itself brought in.

This funding is the “net avoided cost” — the cost Poste Italiane would not have faced if it did not have to carry out its universal postal service obligations.

However, the Autorità per le Garanzie Nelle Comunicazioni (Communications Regulation Authority), AGCOM, said on Tuesday that it had calculated Poste Italiane’s actual burden for those years to be worth EUR 380.6m and EUR 327.3m respectively, EUR 707.9m in total.

The regulator decided that for 2011 and 2012, other industry operators will not be required to pay into a compensation fund to support the universal service.

AGCOM said it had carried out a “complex” investigation into the matter, with both Poste Italiane and other industry players participating.

In response to the regulator’s decision, Poste Italiane said the universal service was “not sustainable” and required a careful review of its scope and economics.

“Urgent”

In a statement, Poste Italiane said the decision of the regulator only made it more important to review the state of the universal service and make changes to respond to the current market.

The company stated: “These large differences [in funding], especially in the light of the Group’s privatisation project, shows how urgent it is to proceed with the adoption of measures to reduce the burden of the universal service which cannot be achieved only by reviewing delivery arrangements to make them more efficient, so that it is more in line with the needs of the country and the economic resources available to finance it.”

Poste Italiane has been one of the most profitable Posts in the world in recent years, but the success has been largely driven by financial and insurance products. Postal revenue has fallen 12% in the past three years, a steeper decline than the European average.

The Group’s new chief executive decided last month to launch a recovery effort to regain lost ground in the mail and parcels market.

Meanwhile, the government is continuing to work towards selling off part of the company within the next year, with intentions at the moment to sell off a 45% stake.