Austrian Post to undergo strategic reorientation

Austrian Post to refocus as it will lose its long-established monopoly in the letter mail business area – and competitors are expected to claim significant market share.

The postal sector in Austria will radically change from January 2011. At this point in time, Austrian Post will lose its long-established monopoly in the letter mail business area, and competitors will aggressively penetrate the market to secure a “big piece of the pie”. As a consequence, Austrian Post will lose the decisive source of revenue which finances the the provision of universal postal services (every day, every door) and overly high staff costs. If appropriate measures are not taken, the result will be a massive decline in revenue and earnings which endanger the competitiveness of Austrian Post.

It is imperative for Austrian Post to react quickly and opportunely to the challenges posed by a liberalised market. At present, the company is required to provide postal services throughout Austria. The Postal Universal Service Ordinance stipulates high quality service requirements for the domestic market, but they only apply to Austrian Post. In addition, the company is at a competitive disadvantage in respect to prevailing labour regulations.

For this reason, the Management Board of Austrian Post presented a strategy paper for the Supervisory Board’s approval on November 12, 2008 proposing a change in the company’s corporate structure in line with the following goals:

1. Continuation of nationwide postal services for the Austrian population
2. Safeguarding the cornerstone of the information infrastructure required by Austria as a business location
3. Preserving the shareholder value of Austrian Post for the nation and the company’s owners (at present approximately EUR 1.6m)

The strategy paper also envisions a fundamental reorientation of the company, based on the following approach:

1. Intensification of the growth strategy in Austria and abroad
2. Expansion of alternative operating models in the branch network
3. Increase of the share of private delivery and sorting services in the letter mail and parcels segments

The specific implementation of these measures subject to the approval of the Supervisory Board is to be included in the company’s budget for each respective financial year, in accordance with the legal and regulatory framework. Thus the measures to be carried out during the course of 2009 will have to be approved at the next meeting of the Supervisory Board on December 11, 2008.

Austrian Post assumes that the Austrian Federal Government and Austrian Parliament will move as quickly as possible to pass a “Postal Market Ordinance“ designed to ensure clearly-defined and fair regulations for all providers of postal services. No laws have yet been passed which prescribe the same guidelines and responsibilities for all postal providers as required by the postal market, and which would ensure “equal opportunity”.