Royal Mail: a sale too far?

[TrueBlueTerrier]

https://theweek.com/politics/royal-mail-a-sale-too-far

For the first time in its 500-year history, Royal Mail has fallen into foreign hands, said James Warrington in The Daily Telegraph.

"Ministers have given the green light" to its sale to Czech billionaire Daniel Kretínský's EP Group. As part of the deal, the Government will retain a "golden share" in the company, giving it control over any major governance changes. Postal workers will also be handed 10% of any dividends paid out to Kretínský and "granted a greater say in how the company is run" through a new workers' group that will meet with bosses monthly.

In addition, EP had also made commitments to maintain the one-price-goes-anywhere Universal Service Obligation (USO), which now means delivering first-class letters six days per week, and to keep Royal Mail's HQ and tax base in the UK. The Communications Workers Union welcomed the move as "a fresh start" – arguing that the current management had undermined the company so badly that it risked "postal services being killed off completely".

'Part of the weft and weave of everyday British life'
"We have long since got used to our corporate crown jewels being raided by foreign buyers," said Jonathan Prynn in The London Standard. Yet this deal feels different. "Royal Mail, for all its faults, is part of the weft and weave of everyday British life." Its sale is a sad day – but "a regrettably inevitable one". Toxic labour relations, deteriorating delivery standards and rocketing stamp prices have all undermined Royal Mail's reputation since privatisation in 2013. Letter volumes are in rapid decline, and the company's share of "the growing and far more profitable parcels sector has plummeted".

The "Czech Sphinx", as Kretínský is known, "has signed up to quite a straitjacket", said Alistair Osborne in The Times: keeping the USO, no compulsory job losses for now. He may find some savings, but this "doesn't look to be a deal built on financial engineering". To get a return, he'll have to run things better, with "a far sharper focus on parcels" built on an initial £400m spend on postal lockers. If he gets it right, "customers may not rue this Christmas delivery".

'Big changes' ahead
We don't know what Kretínský's plans are, said Matthew Lynn on Spectator.co.uk. But it's hard to believe that he's just going to pour money into a "terrible business" without demanding big changes. Indeed, "it requires a heroic suspension of disbelief to believe this is anything other than a debt-inspired deal", said Nils Pratley in The Guardian. Presumably, Kretínský thinks his downside risk is limited by Royal Mail's large property holdings, and the profit-making GLS parcels wing. Selling this vital institution is a gamble. "Labour has no excuse if this punt goes horribly wrong."