Business Post could double in size over 3 years following UK Royal Mail deal

Paul Carvell, chief executive of Business Post PLC, said today’s ground-breaking access agreement with Royal Mail PLC could double the size of Business Post over the next three years.

Under the terms of the deal, business letters sent via Business Post’s UK Mail division will be delivered by Royal Mail, who will be charging around 13 pence per letter for the service.

The service will become available from April this year.

‘(The deal) could double the size of Business Post over the course of the next three years,’ Carvell told AFX News in an interview.

Shares in Business Post jumped 16 pence to 544-1/2 pence at 10.03 am, and analysts at house broker Arbuthnot said the ‘group has a very significant opportunity to win market share and now needs to build its infrastructure accordingly.’

The analysts have assumed that 2006 will see an achievement of 1.5 pct market share, rising to 3 pct by 2007.

Carvell said the group is targeting a 3 pct market share in the medium term.

Today’s agreement is the first access deal of its kind in Europe and marks a new phase in the development of competition and choice in the UK mail market, said Royal Mail’s chief executive, Adam Crozier.

‘The contract we’ve signed today gives Royal Mail a commercial income stream without undermining our ability to continue providing a one-price- goes-anywhere universal service to the UK’s 27 million addresses. Those are the key considerations. We’ve demonstrated that it’s possible to reach a commercial agreement on access while safeguarding the universal service,’ he said in a statement.

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