Royal Mail’s parent, Royal Mail, has criticized the slow pace of Ofcom’s consultations on reforming the universal service obligation of the struggling postal operator. Keith Williams, aged 68, said to International Distribution Services shareholders at the annual meeting on Wednesday that, while the Royal Mail, which is losing money, welcomed Ofcom plans for consultation, the process was “frustratingly long”, with a decision not due until the summer of next year.
He said: “We have spent the past four years back-and-forth between government and Ofcom, while [letter] volume has dropped even more.” After persistent lobbying and in response to the financial strain Royal Mail is experiencing due to the long-term decline of the letters market, Ofcom announced this month that it will assess the possibility of loosening Royal Mail’s obligations before launching an official consultation in early 2019. This includes the requirement for items delivered anywhere in the UK at a uniform rate.
The proposals include the scrapping of second-class delivery on Saturdays, but continue to deliver within three days. They also retain a first-class next-day service six days a weeks. The Greeting Card Association, and the Communication Workers Union are opposing the reforms. Williams, the former British Airways boss, encouraged shareholders at the meeting held on Wednesday in Newbury Racecourse, Berkshire where retail shareholders and unions questioned the board, to support the EP Group’s offer of £3.57 billion (370p per share), a conglomerate owned by Daniel Kretinsky IDS’s biggest shareholder.
He said that the bid represents a “significant” premium of 72,7%, “balanced with… the need to make further strategic investments”, as well as “reflects the bidder’s view of uncertainty regarding the nature and timing USO reform”.
Williams described Royal Mail as a “special asset” with a “unique role in the society”. This is why we “spent as much time as we did to value Royal Mail on going forward on undertakings that will protect Royal Mail”.
He said that the five-year commitments made by EP Group to the UK government, which included Royal Mail’s UK Headquarters, were “commercially quite a long period… almost as long as a Parliament”.
Ofcom’s spokesman said: “In response our national debate about reforming the universal post service, we received only recently a detailed plan by Royal Mail as to how this could work in reality. Legally, we are required to consult the public on any proposed changes and ensure that any changes meet postal users’ needs, which is why our consumer research is in-depth.
Royal Mail can do something right away to improve its performance.
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