Qualified approval for 7 cent stamp rise in Ireland
The Commission for Communications Regulation (ComReg) has agreed in principle to allow An Post to increase the price of a stamp by seven cent to 48 cents.
But in a decision published yesterday the regulator deferred a final ruling until An Post sets up a discount scheme to help small firms with the cost of postage.
This final ruling is now due after August 15th and should open the way for price increases on a range of postal services from the end of this month.
The increases will be worth E18 million a year to An Post, which last week published its biggest annual losses of E70.5 million.
An Post welcomed the ruling last night, which it described as the first major increase in Irish postal prices since 1991.
Even with the increase the Irish basic postal tariff will still be one of the cheapest in Europe, added an An Post spokesman, who said a detailed response to the paper would be provided at a later date.
The newly agreed postal tariffs include a 17 per cent increase in the cost of a basic stamp, a new 60 cent rate for larger envelopes and a new 96 cent rate for other packets. An Post will also be able to increase a range of prices for its direct mail service, Postaim.
To obtain final clearance for its proposed price raises, An Post will have to deliver a suitable discount scheme which benefits small and medium-sized firms.
ComReg said a proposed discount scheme submitted by An Post discriminated against smaller firms because it was only available to customers posting 2,000 or more items at one time.
The regulator urged An Post to reduce this threshold to about 350 items and provide details on a revised scheme by August 15th.
The decision paper published by ComReg yesterday also clearly shows that the regulator is unhappy with certain elements of An Post’s business.
It states that ComReg is “reluctantly, minded to agree the headline tariffs proposed” by An Post.
“The commission has come to the view that an increase in prices at this point is unavoidable, given An Post’s financial outlook. This increase will not solve An Post’s problems on their own but it will give it the time and space to address them.”
The paper says there was little support for the proposed price rises except from submissions made by An Post and the Communication Workers’ Union.
ComReg says that not enough has been done by An Post to reduce its cost base, and heavy investment by the firm in new technology has not yet produced the forecast improvements.
An Post admitted last week that its restructuring programme was 18 months behind schedule. Despite planning to cut 1,100 jobs by 2005 and taking a restructuring charge of E52.5 million in its 2002 results, the workforce grew by 200 last year.
Its new chief executive, Mr Donal Curtin, said the firm had begun a fundamental review of its operations and would focus on delivering cost cuts.
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