The Royal Mail: UK Postal service sucked into the privatization trend

 Published On: Jan, 2014 |    No of Pages: 20 |  Published By: MarketLine | Format: PDF
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Introduction

The Royal Mail is one of the oldest postal services in the world and has been a nationalized industry for most of its history. However in recent years the organization has been targeted by successive governments as one that could potentially be pushed down the path towards privatization. In the fourth quarter of 2013 the government decided to float the company on the stock market.

Features and benefits

* Learn how the flotation was handled and who the government worked with to value the company.
* Learn how previous privatization schemes of major UK industries have faired and what this means for Royal Mail.
* Find out just what Royal Mail's market consists of and who it has to compete with now and in the future.
* Examine how the share price has moved since the flotation and why has it been criticized so heavily in the media.
* Learn what lies in store for Royal Mail in the future and how these changes may affect UK consumers and Royal Mail staff.

Highlights

Royal Mail is the largest post operator in the UK and has an annual turnover of around £9bn ($14bn), with a wide array of postal services. Since privatization process began, competitors have been entering the market and have managed to take some key customers from Royal Mail but despite this it commands a large market share.
Along with the deal to float the company there have also been some important changes to the way that the company is regulated, certain factors such as pricing, universal service and downstream access for competitors have been eased somewhat and it remains to be seen just how this will affect the market.
There is a strong trend towards privatization and increasing competition in traditionally governmental dominated markets. The selling off of monopolies is not necessarily something which is seen as a positive and many argue that loss of service and reduction in quality will ensue when a greater priority on profit is introduced.

Your key questions answered

* Why did the UK government decide to float the Royal Mail on the stock market and why has there been resistance for a number of years?
* Just how profitable is Royal Mail as a business and who are its main competitors now and in the future?
* Why have commentators been critical of the Royal Mail IPO and why did the share price jump dramatically?
* What are the likely implications for the UK postal market now that the company has gone private?
* With these changes came major changes in the way that the company is regulated, how will they affect universal service?

OVERVIEW
Catalyst
Summary
THE ROYAL MAIL GROUP
Royal Mail
Standard Mail
Special Delivery
Business services
Parcelforce Worldwide
HOW PRIVATIZATION MAY AFFECT ROYAL MAIL
Principle that privatizing firms makes them more efficient
More emphasis on making profit may alter priorities
In practice profit over service may be observed in the future
Ofcom criticizes the Royal Mail on missing targets
There has been public resistance
RAPID SHARE PRICE GROWTH SINCE FLOATATION
How the floatation was organized
How the share price moved
UBS, Goldman Sachs and Vince Cable accused of negligence and foul play
REGULATION CHANGES
Postcomm to Ofcom
Previously unfair market conditions for Royal Mail
COMPETITION IN THE UK POSTAL SERVICE MARKET
UK Mail
DHL
TNT
CONCLUSIONS
The Royal Mail floatation initially appeared shambolic
Change in priorities could see Royal Mailís services change
Major changes to regulation could alter the market dramatically
APPENDIX
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