The prospective new owner of Royal Mail has pledged to maintain the requirement of delivering letters across the UK six days a week, as long as he is in charge.
“As long as I’m alive, I completely exclude this,” Czech billionaire Daniel Kretinsky told the media.
Mr. Kretinsky’s £3.6bn offer for Royal Mail has been accepted by its board. Shareholders are expected to approve the deal in the coming months, but the government also has a say over whether it proceeds.
Currently, the Universal Service Obligation (USO) requires Royal Mail to deliver letters six days a week nationwide for the same price. However, questions have arisen about the potential for future service reductions.
In an exclusive interview with the media, Mr. Kretinsky also mentioned he would be willing to share profits with employees if his purchase of the group is approved.
Nevertheless, he seemed to dismiss the idea of employees having a stake in Royal Mail, a condition unions have proposed in exchange for their support.
The Royal Mail board agreed to a £3.6bn takeover offer from Mr. Kretinsky in May for the 500-year-old organization, which employs over 150,000 people. Including assumed debts, the offer totals £5bn.
Due to Royal Mail’s national importance, the government has the authority to scrutinize and potentially block the deal.
In addition to securing government approval, Mr. Kretinsky must also persuade postal unions that the proposed deal will benefit employees.
The USO is a potential sticking point for both the government and unions.
Royal Mail is legally required to deliver letters six days a week and parcels five days a week to every address in the UK for a fixed price.
How effectively this has been implemented is another matter. Ten years ago, 92% of first-class post arrived on time. By the end of last year, this figure had dropped to 74%, according to the regulator Ofcom.
Last year, the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.
Royal Mail has been pushing for this obligation to be relaxed. It wants to reduce second-class letter deliveries to every other weekday, claiming this will save £300m and result in “fewer than 1,000” voluntary redundancies.
Mr. Kretinsky has committed in writing to honoring the USO, but only for five years.
After that, theoretically, the new owners could abandon it.
However, Mr. Kretinsky told the media: “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this.
“I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”
Mr. Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this.”
Another potential hurdle for the deal is the company’s structure.
Unions would prefer the company to be renationalized, but Dave Ward, general secretary of the Communication Workers Union (CWU), told the media that would be “difficult in the current political and economic environment.
