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Labour’s gamble with Royal Mail may go horribly wrong | Nils Pratley
- Labour’s U-turn from renationalising Royal Mail to supporting its leveraged takeover by Czech billionaire Dan Křetínský has raised concerns among experts. National Postal Services have been privatised in several European countries without inviting overseas ownership, due to the critical infrastructure they provide despite the rise of digital communication. Although Křetínský has promised good investments, his undertakings are laughably weak; for instance, one restriction on EP UK Bidco, Křetínský’s takeover vehicle solely managing Royal Mail, only requires it to equal last year's on-time delivery of letters, which they had just been fined over £10m for. This debt-inspired deal has an aggressive capital structure, and the Czech businessman focuses on the property portfolio (£1bn surplus in the pension fund) and growth from GLS in the Netherlands, where the Royal Mail owner’s actual value lies.
- The deal is a surprise for Royal Mail, which has been appealing for years for reform of the Universal Service Obligation (USO) to reduce costs and reflect the decline in the volume of letters since privatisation. Now it is on the verge of achieving this, but is being sold to distant owners who have a huge appetite for debt. Labour has no excuse if this gamble goes wrong.
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