Draft regulation could mean higher TNT rates

[TrueBlueTerrier]

http://www.reuters.com/article/tnBasicI ... 9920071106

AMSTERDAM, Nov 6 (Reuters) - A draft Dutch post regulation could mean higher stamp prices from mail and parcel firm TNT (TNT.AS: Quote, Profile, Research) after liberalisation of the market, post and telecoms regulator OPTA said on Tuesday.

OPTA pointed out a potential loophole in draft regulation supplementing the country's new postal law that is due to end TNT's remaining monopoly in the Netherlands from January 2008, which could lead to higher prices.

Investors have closely followed the liberalisation process as it affects the Dutch mail business, one of TNT's most profitable units. Higher stamp prices could mean better margins for the unit.

The Dutch parliament had approved the postal law in June but left a number of details for the economy ministry to flesh out. The ministry's draft regulation was submitted to parliament on Tuesday, and OPTA released its comments at the same time.

OPTA -- which will be in charge of overseeing the so-called universal service that includes consumer mail and parcels -- said a subtle difference to the existing postal regulation could allow TNT to move profitable activities outside of the scope of regulators and hence boost stamp prices.

Instead of TNT as a group, its Dutch unit TNT Post BV will be assigned as provider of the universal service, OPTA said.

"TNT has the possibility to take profitable postal activities out of TNT Post and move them to another unit. This would decrease the economies of scale that are realised by providing postal services in one unit," OPTA said.

"As a rule it can be said that lower economies of scale lead to higher tariffs."

A TNT spokesman said the company viewed the regulation drafted by the economy ministry as a continuation of the current situation and that it considered the rules workable. He declined to comment specifically on OPTA's comments.