Dutch to postpone mail market liberalization
The Netherlands will postpone the full opening of its mail market, originally due in January, partly because the government fears Germany’s plans to introduce a minimum wage for postal workers will impede competition there.
One condition for the market opening in the Netherlands was a level playing field in Germany. Dominant Dutch mail company TNT argues that does not exist because the planned minimum wage is set too high for it to compete effectively with Deutsche Post .
Dutch Junior Economy Minister Frank Heemskerk said it was unclear what would happen in Germany, adding that discussion surrounding labour conditions for mailmen in the Netherlands was also still fluid.
Shares in TNT – which will as a result keep its monopoly on letters of up to 50 grammes for longer – rose on the news and were up 3.9 percent at 28.83 euros by 1455 GMT. TNT separately announced that it had settled all outstanding tax matters in Britain and that it planned to raise its dividend payout ratio to 40 percent of normalised net income by 2010 from the current 35 percent. “The introduction of the postal law from January 1, 2008, would not be prudent, and we thus should not do it,” Heemskerk told a parliament committee in The Hague. He said he expected the situation to become clearer in the first half of 2008.
The economy ministry has previously said that the market opening should ideally coincide with the fiscal year of mail companies, or at least with the beginning of a quarter. Both Deutsche Post, which competes with TNT in the Netherlands, and privately-held mail company Sandd sharply criticised the move.
Sandd Chief Executive Bart Stomphorst told news agency ANP that the government had made a “dramatic decision” that would cost his company millions of euros in revenue from contracts it had won but now was unable to fulfil.
A Deutsche Post spokesman said the Dutch move was “utterly incomprehensible” and might be against European Union regulations.
The European Parliament is due next month to take a final vote on a plan to open up the EU’s 88 billion euro postal markets to full competition from 2011.
ING analyst Piethein Leune said postponing Dutch liberalisation until the 2011 limit could add 1 euro per share to TNT’s valuation.
Apart from TNT’s competitive position in Germany, Dutch politicians also worried about workers of TNT’s competitors in the Netherlands, who usually do not have an employment contract and get paid by the number of items delivered.
The economy ministry has said that in some cases, TNT’s competitors have paid less than the Dutch minimum wage, which is around 8.45 euros per hour based on a 36-hour week.
Petercam analyst Thijs Berkelder said in a note on Tuesday that the planned German minimum wage of up to 9.80 euros per hour would be 20 to 30 percent above TNT’s current pay level in Germany and could depress its mail margins there by 6 to 8 percentage points.
In the Netherlands, TNT has already lost roughly 12 percent of the mail market to competition, and it plans a further round of cost cuts in anticipation of further market share losses.
