The UK government has approved the £3.6bn sale of Royal Mail’s parent company, International Distribution Services (IDS), to Czech billionaire Daniel Kretinsky’s EP Group, following a series of legally binding agreements. Despite the green light, the government has ensured certain protections are in place, including the retention of a “golden share” that will require approval for major changes to Royal Mail’s ownership, headquarters, and tax residency.
According to BBC report, under the deal, EP Group is committed to maintaining the Universal Service Obligation (USO), ensuring deliveries of letters six days a week and parcels Monday to Friday, a service that currently underpins the UK’s postal system. Kretinsky, who has pledged to honor the USO “in whatever form it takes” for as long as he is alive, reinforced his long-term vision for the company. However, Royal Mail has suggested to regulator Ofcom that adjusting the USO could save up to £300 million annually.
Ofcom’s chief executive, Dame Melanie Dawes, emphasized that with the volume of letter deliveries on the decline, it’s necessary to re-evaluate the sustainability of the USO in the future. The regulator is currently reviewing potential reforms, with a decision expected next year.
Business Secretary Jonathan Reynolds highlighted the deal as a commitment to ensuring a financially stable Royal Mail, one that continues to serve hard-to-reach communities. Kretinsky, expressing confidence in the future of the business, said, “EP Group is a long term and committed investor with a mission to make Royal Mail a successful modern postal operator with high-quality service and products for its customers.”
The takeover is expected to finalize in early 2025, bringing not only financial support but a wealth of logistical expertise from GLS, EP Group’s profitable European parcels business. The aim is to revitalize Royal Mail’s position in the growing parcels market, which has seen increasing competition in recent years.
Despite the optimism, unions remain cautious, especially concerning the future of the USO. Dave Ward, general secretary of the CWU union, praised the agreement but stressed that USO reform remains unresolved, calling it “a long way to go” before any changes can be agreed.
Royal Mail was recently fined £10.5 million by Ofcom for failing to meet delivery targets, but efforts are underway to restore its reputation and performance. Jenny Hall, director of corporate affairs at Royal Mail, stated that while they are investing in improvements, “it’s really important” that the USO is reformed to adapt to changing consumer habits.
As the UK postal service transitions to new ownership, the focus remains on balancing tradition with modern demands, ensuring Royal Mail continues to meet public needs while adapting to the digital age.
About Author
Leave a Reply