Royal Mail loses British Telecom contract
Royal Mail has lost the contract to handle mail for BT, Britain’s largest telecommunications business, as bulk mailers continue to switch to the private sector in search of savings and better service.
TNT Post, UK subsidiary of the privatised Dutch mail operator, will take over the collection and sorting of the 170m bills and statements BT sends out each year. It will hand them over to Royal Mail’s 69 sorting centres for final delivery to its 25m customers within two days of pick-up.
The contract, worth GBP90m over three years, is thought to be the largest since the postal market was opened fully to competition at the start of last year.
Private operators have now taken more than 10 per cent of the postal services market, winning contracts from banks, insurers, utilities and charities – even though, unlike Royal Mail, they have to charge value added tax.
BT said it was attracted by TNT Post’s greater flexibility in pick-up times, two-day delivery service and tracking systems that would allow it to monitor its mail. It also expected to make cost-savings of up to GBP3m a year.
TNT Post handles mail for other telecoms companies, including T-Mobile and Virgin Mobile, and has large contracts with NPower, Thames Water, Lloyds TSB and BSkyB.
Last week, the Department for Work and Pensions awarded a GBP12m a year contract to UK Mail, a subsidiary of Business Post, to handle 82m items a year sent out by two bulk mailing centres in the north of England.
The continuing loss of bulk mail contracts comes as Royal Mail and the government are finalising a deal to allow the state-owned former monopoly to invest GBP2bn in modernisation to fend off the new competitors.
The deal now looks likely to fall short of management’s demand that staff be given 20 per cent of the shares in the business, but will involve substantial incentives to encourage staff to accept large-scale restructuring.
