Royal Mail appeals to regulator on TNT venture

[POSTMAN]

http://www.ft.com/cms/s/0/3a5d2f18-640a ... z2nRsZZ3P9" onclick="window.open(this.href);return false;

Royal Mail has appealed to Ofcom, the regulator, after a joint venture was announced to fund an expansion of direct mail deliveries by TNT Post UK in a challenge to the newly privatised postal operator.

LDC, Lloyds Banking Group’s private equity arm, and Dutch postal operator PostNL said they had agreed a joint venture that would provide the funding and expertise to allow TNT Post UK to roll out its end-to-end delivery service.

PostNL, which currently owns TNT Post UK, will have a 40 per cent stake in the venture, which will encompass all the company’s operations. The move is subject to approval by the European Commission and is expected to be completed early in 2014.

TNT Post UK, Britain’s second largest postal operator, began its effort to break Royal Mail’s near-monopoly of “final mile” delivery in 2012 by launching its own service in west London, with the aim of creating a UK-wide delivery network to households by 2015.

It has since created more than 1,000 jobs in the capital and extended its delivery service to Greater Manchester in November. It expects to reach 20,000 jobs across the UK, covering 40-50 per cent of the country.

Royal Mail warned that “distortive cherry-picking” of profitable areas could undermine the financial sustainability of the universal service – under which it is legally obliged to deliver six days a week to every address in the UK at a uniform price – by making it more costly.

It urged Ofcom to review TNT’s “current and future plans and be prepared to intervene rapidly if needed”.

An Ofcom spokesman said: “Ofcom has a duty to secure the universal postal service. We watch the market very closely and, if we identify any threat to the universal service being posed by competition, we would be ready to step in to protect the needs of postal users.”

Ofcom, in its annual monitoring report on the postal sector last month, found that mail handled by Royal Mail’s end-to-end competitors so far represented only 0.2 per cent of volumes in 2012-13, so intervention does not look imminent.

Nick Wells, TNT Post UK’s chief executive, said in November: “There is not a shred of evidence that competition is undermining the universal service obligation. Competition is needed to help Royal Mail improve efficiency.”

The joint venture will be led by the current TNT management team. Expansion of its network will be funded by LDC and Royal Bank of Scotland.

Yann Souillard, LDC managing director, said the strategy was “an innovative and dynamic approach to postal delivery which should provide an exceptional platform for both customer requirements and the business growth plans”.

Royal Mail entered the FTSE 100 this week amid continued controversy about whether it was privatised too cheaply. It was floated at 330p a share in October and was up 0.8% on Friday.

[fishtank]

Royal Mail warned that “distortive cherry-picking” of profitable areas could undermine the financial sustainability of the universal service

It didn't take long for the words "financial sustainability" to crop up and the ink on the the legal protections isn't even dry yet.

[Brain Fury]

Royal Mail warned that “distortive cherry-picking” of profitable areas could undermine the financial sustainability of the universal service

It didn't take long for the words "financial sustainability" to crop up and the ink on the the legal protections isn't even dry yet.

So you don't think the planned expansion by TNT is any real threat to RM then? Or perhaps RM should just wait until it's in the s**t before mentioning it to the regulator

[Captain Scarlet]

Royal Mail warned that “distortive cherry-picking” of profitable areas could undermine the financial sustainability of the universal service

It didn't take long for the words "financial sustainability" to crop up and the ink on the the legal protections isn't even dry yet.

My thoughts exactly. This is the get out clause that RM knew would happen and we will see nothing of what was 'promised' in the deal

[fishtank]

So you don't think the planned expansion by TNT is any real threat to RM then? Or perhaps RM should just wait until it's in the s**t before mentioning it to the regulator

It's already been mentioned....many times.
Ofcom are very clear about the circumstances which would provoke a review of E2E.
So clear they have a sectioned entitled The circumstances under which we would
undertake a review of the need for intervention in relation to end-to-end competition.

http://stakeholders.ofcom.org.uk/binari ... tement.pdf" onclick="window.open(this.href);return false;

So bearing in mind the regulator already knew about this planned expansion and has already set out a strategy for supposedly dealing with it and obviously TNT knew about it,You do wonder who this little bit of sabre rattling is aimed at.
They appear to be laying the foundations for something,what it is I really don't know,perhaps a little political pressure on Ofcom?
The government does still hold a 30% stake and they'll be looking for top price when they offload that around April.

[Brain Fury]

So you don't think the planned expansion by TNT is any real threat to RM then? Or perhaps RM should just wait until it's in the s**t before mentioning it to the regulator

It's already been mentioned....many times.
Ofcom are very clear about the circumstances which would provoke a review of E2E.
So clear they have a sectioned entitled The circumstances under which we would
undertake a review of the need for intervention in relation to end-to-end competition.

http://stakeholders.ofcom.org.uk/binari ... tement.pdf" onclick="window.open(this.href);return false;

So bearing in mind the regulator already knew about this planned expansion and has already set out a strategy for supposedly dealing with it and obviously TNT knew about it,You do wonder who this little bit of sabre rattling is aimed at.
They appear to be laying the foundations for something,what it is I really don't know,perhaps a little political pressure on Ofcom?
The government does still hold a 30% stake and they'll be looking for top price when they offload that around April.

Yes I've seen that before. It notes that in the consolation exercise RM asked for more certainty about when the regulator would intervene. More than is given in previous and this statement. RM has been consistent in calling for this and more clarity about how Ofcom would assess the impact on the USO and the actions it would take to protect it, none of which has been forthcoming. In the meantime TNT has moved from talking about expansion plans to obtaining the finance so they can be implemented. So of course this continued "sabre rattling" is intended to put political pressure on Ofcom in order to protect RMs commercial position? Any RM employee ought to be pleased. Anyway I though you did really know what it was aimed at.

[Jamesethefirst]

If mail is down as much as it is continually claimed to be,then why are TNT so interested in doing delivery work, I notice they are also using cycles, just as we go the opposite way, now there's a surprise.

[Brain Fury]

If mail is down as much as it is continually claimed to be,then why are TNT so interested in doing delivery work, I notice they are also using cycles, just as we go the opposite way, now there's a surprise.

Addressed mail is down but direct mail isn't and TNT want a slice of what there is on profitable routes.

They are using bikes because they are only carrying small volumes. Let's hope that they carry on using them.

[Lincox]

TNT are using bicycles because they know that they have been successfully trialled over many years, are cost effective, green, and pose little threat to future sickness and physical damage claims. They are also quicker than any of the methods Royal Mail in conjunction with CWU have imposed.

[Hitcher]

TNT are using bicycles because they know that they have been successfully trialled over many years, are cost effective, green, and pose little threat to future sickness and physical damage claims. They are also quicker than any of the methods Royal Mail in conjunction with CWU have imposed.

They're using bikes because they're only delivering letters!

[axeman]

Forsooth mr Fury speaketh with a royal fail voice

[Brain Fury]

Forsooth mr Fury speaketh with a royal fail voice

Royal Fail? ho, ho - did you think that up all on your own? I know you're probably not used to listening to people that know what they're talking about but honestly you should try it some time

[Lincox]

TNT are using bicycles because they know that they have been successfully trialled over many years, are cost effective, green, and pose little threat to future sickness and physical damage claims. They are also quicker than any of the methods Royal Mail in conjunction with CWU have imposed.

They're using bikes because they're only delivering letters!

And do you think that will always be the case?

[k979aaa]

TNT are using bicycles because they know that they have been successfully trialled over many years, are cost effective, green, and pose little threat to future sickness and physical damage claims. They are also quicker than any of the methods Royal Mail in conjunction with CWU have imposed.

They're using bikes because they're only delivering letters!

And do you think that will always be the case?

The way their security works is they don't give a dam! A chained bicycle unattended is ok as the way TNT POST works we would be sacked for that!

[axeman]

Sorry MR fury but you know not who I know or how far up the gravy train they are so go back to your toadstool and be Fury-ious by your self