Paris braves the storms and ties itself to a Poste
One by one the taboos of French public service appear to be crumbling. First France Telecom, then Gaz de France and EDF were partially privatised. As if that were not heresy enough, GdF will even be merged into a private company later this month. Now it is the turn of La Poste, France’s third largest employer and a potent symbol of its deeply cherished public-service ideals.
Rothschild, the French bank, has been hired to lead La Poste to a partial privatisation, which could see it valued at about EUR 10bn (USD 15.7bn) in a flotation within two years. Of course that depends on at least two things – first a change in legislation, which in turn will require support from a sometimes surprisingly hesitant ruling UMP party.
Privatising GdF, for example, was far from a done deal, in spite of support from then party leader and presidential hopeful, Nicolas Sarkozy. Imagine how much more reluctant many deputies may be if they believe a privatisation could threaten services in their local constituencies that go well beyond delivering letters, and stretch even to baguettes and newspapers.
Second, the unions – already feeling marginalised by President Sarkozy’s divide-and-rule tactics – are up in arms about the possibility that the legislative process could be launched early next year. The president’s quip this weekend that France had changed so much that no one would notice if there was a strike, was an almost direct challenge to unions to prove him wrong.
Nonetheless, the government seems determined and the process is being marketed as the only possible response to the arrival of full postal liberalisation in 2011. With the formidable Deutsche Post gearing up for an assault on the French postal market, La Poste has little choice, according to Jean-Paul Bailly, chief executive. The French group has been successfully restructured, is profitable and and has resolved its pension issues. But it still needs the financial flexibility that a flotation would bring to open up new markets and revive its 12,500 post offices to face competition more effectively, he argues.
That may be true, but every silver lining has a cloud and that may be in the timing. Why the government believes this is the right moment to raise the question of a postal sell-off remains a mystery. Though the unions have been powerless in the face of Mr Sarkozy’s relentless reform agenda, the public mood remains uncertain. Rising energy costs seem to have obscured the benefits of EDF’s and GdF’s sell-offs and there is considerable public discontent over constrained consumer spending power.
Moreover, it seems the wrong moment to make the case that a partial privatisation is the only way to fund long-term investment when the government shareholder is penniless. The market is in no mood to listen to long-term investment stories, according to some of France’s best known companies. Take France Telecom’s failed bid for TeliaSonera of Sweden, scuppered by the reluctance of its own investors.
