French La Poste to spend €3.4bn on modernisation
La Poste, the French post office, has announced plans to spend €3.4bn ($4bn) on modernising its mail sorting and delivery systems over the next seven years to prepare for the liberalisation of Europe’s postal sector in 2009.
The governing council of state-owned La Poste voted to grant its chairman Jean-Paul Bailly the authority to sign a new 2003-2007 strategic plan with the government.
The plan allows La Poste to invest €3.4m on modernising its mail systems between 2004 and 2010, a much higher figure than the €1bn first announced by industry minister Nicole Fontaine when she presented the plan in October.
La Poste hopes the investment will increase the proportion of mail sorted automatically from 60 to 90% by 2007. It earns almost two-thirds of its revenues from mail delivery services, a sector in decline, which will be fully opened to competition by 2009.
Earlier this month the company’s credit ratings were downgraded by Standard & Poor’s from AAA to AA+ on fears about the potential negative impact of postal liberalisation on its government support and profitability.
In an effort to help La Poste expand its financial services activities, the government has granted it permission to start offering mortgages, without the need for customers to have an existing savings plan.
However, this will not start until 2005 and La Poste’s request to offer household insurance and consumer credit have been rejected, with only a promise to review them again in 2006.
The company said the strategic plan – its biggest ever single investment – was aimed at transforming La Poste into one of the top three postal companies in Europe.
However, its financial performance compares poorly with its European peers, after it made net profits of €34m last year compared with €599m at the Dutch post office TPG and €1.59bn at Deutsche Post.
