Tag: Europe

Royal Mail said today that it needed to invest GBP2bn in modernisation as it braces itself for an onslaught of new competition from January 1. No less than 14 companies have registered with regulator Postcomm to handle post in the UK, including German firm Deutsche Post and Dutch postal service TNT. Royal Mail said it would “fight for every letter”, but stressed the importance of new investment. “Royal Mail will fight hard for every single letter. Royal Mail is determined to compete successfully in the open market – but in order to do so we need a fair regulatory regime and the ability to invest GBP2bn in the modernisation of the business,” Royal Mail spokesman David Simpson said.

Ministers are to open talks with Royal Mail over its demands for up to Pounds 2bn of investment after the postal operator agreed to tough new targets for improving efficiency. The negotiations, which will run well into the new year, are expected to focus on several options, all of which would involve the government, which is the state-owned postal operator’s sole shareholder, putting public money into the company. With Royal Mail’s financial position precarious, and trade unions fearful of another round of job cuts, its management is lobbying the Department of Trade and Industry for help. One option under discussion would be to provide the company with a loan repayable over a number of years. Another option, favoured by Royal Mail, could be some form of equity investment, not unlike a rights issue, under which the government would inject cash as equity in return for a bigger dividend in future. Alan Johnson, trade and industry secretary, will lead the talks with Allan Leighton, Royal Mail chairman.