Czech Billionaire's Acquisition of Royal Mail: What It Means for the Future of UK Postal Services

Vithanage Madhushani Jadetimes Staff

V.E.K. Madhushani is a Jadetimes news reporter covering Business.

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Image Source : Simon Jack

Czech Billionaire’s £3.6bn Takeover of Royal Mail

The UK government has approved the £3.6bn acquisition of International Distribution Services (IDS), Royal Mail's parent company, by Czech billionaire Daniel Kretinsky’s EP Group. This marks a significant shift for the future of the iconic postal service, with several legally binding commitments designed to protect Royal Mail’s operations and public services.

Commitments to Safeguard the Universal Service Obligation (USO)

As part of the deal, EP Group has pledged to uphold Royal Mail’s Universal Service Obligation (USO), which requires the delivery of letters six days a week and parcels five days a week across the UK. This commitment will remain in place as long as Kretinsky owns the company.

However, the USO is currently under review by the regulator Ofcom, which is considering changes like reducing second-class letter deliveries to every other weekday. This reform is seen as a cost-saving measure, with Royal Mail estimating it could save up to £300m annually. Ofcom’s Chief Executive, Dame Melanie Dawes, has acknowledged the need to reassess the USO in light of declining letter volumes, with a decision expected next year. Despite this review, Kretinsky has personally committed to maintaining the USO in its current form, stating he would honor it “for as long as I am alive.”

Worker and Union Agreements Secured

The acquisition comes with additional commitments to support Royal Mail’s workforce. EP Group has agreed to:

- Grant workers a 10% share of any dividends paid out to Kretinsky.

- Establish a workers’ group to provide employees with a direct channel to engage with the company’s directors on operational and strategic matters.

Dave Ward, General Secretary of the Communication Workers Union (CWU), praised the agreement, calling it the "best opportunity" to secure Royal Mail’s future. However, he emphasized that no agreement has yet been reached on USO reforms, and negotiations are ongoing.

Balancing Losses with a Profitable European Parcel Business

Royal Mail has faced significant challenges in recent years, including financial losses linked to declining letter volumes, which are now at half the level they were in 2011. Meanwhile, IDS’s European parcel delivery business, GLS, has been highly profitable, generating over £300m in revenue last year.

Kretinsky aims to leverage GLS’s success and expertise to revitalize Royal Mail’s position in the growing UK parcels market. Plans include investing in out-of-home delivery lockers and creating a pan-European logistics network.

Commitments to Protect Royal Mail’s UK Identity

To address national security concerns and preserve Royal Mail’s identity, the government negotiated several conditions for the takeover, including:

- Maintaining Royal Mail’s headquarters and tax residency in the UK for at least five years.

- Retaining the Royal Mail brand name.

These measures are designed to ensure continuity in operations and reassure the public that the company’s UK roots will remain intact. 

Rising Challenges Amid Regulatory Oversight

Royal Mail continues to face significant challenges as it seeks to modernize its operations and improve performance. Last week, the company was fined £10.5m by Ofcom for failing to meet delivery targets for first- and second-class mail.

Jenny Hall, Royal Mail’s Director of Corporate Affairs, emphasized the importance of USO reform to adapt to shifting consumer habits, including the growing dominance of parcel deliveries over letters. She also pledged to keep postage costs as low as possible, although rising operational costs have already led to price hikes, such as the recent increase in first-class stamp prices to £1.65.

A Controversial Takeover Amid National Security Concerns

The sale was previously reviewed under national security laws due to Royal Mail’s role as critical national infrastructure. Although Kretinsky’s companies include a gas transmission service involved in the reduced transport of Russian gas to Europe, Business Secretary Jonathan Reynolds assured Parliament that Kretinsky is a “legitimate business figure,” and prior concerns about his alleged ties to Russia had been dismissed. 

Looking Ahead: A New Era for Royal Mail

Kretinsky has outlined a vision to transform Royal Mail into a modern postal operator that delivers high-quality services. With the integration of GLS expertise, increased investment in technology, and a commitment to preserving the USO, the takeover presents both opportunities and challenges for one of the UK’s most iconic institutions.

The deal’s success will ultimately depend on EP Group’s ability to address Royal Mail’s financial struggles while maintaining public trust and delivering on its promises.

M. Prasad: Transforming Lives with Expert Body Therapy and Ayurvedic Wellness in Hyderabad

By S. Adam Jadetimes Contributor

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Image Source : Naveeth

M. Prasad: A Renowned Body Therapist and Ayurvedic Practitioner in Hyderabad

With over 15 years of dedicated experience in the field of body therapy and holistic healing, M. Prasad has emerged as a trusted name in Hyderabad, India. Specializing in stretching and passive movements, as well as strengthening exercises, he offers customized therapy sessions aimed at improving physical mobility, alleviating pain, and enhancing overall well-being.

Expertise in Body Therapy

M. Prasad’s approach to body therapy is rooted in science and tradition. His mastery of stretching and passive movement techniques helps clients improve flexibility, reduce stiffness, and relieve chronic pain. Combined with strengthening exercises tailored to individual needs, his sessions ensure a comprehensive path to recovery and physical fitness.

Ayurvedic Solutions for Wellness

In addition to his expertise in physical therapy, M. Prasad is skilled in crafting Ayurvedic powders that address a range of health concerns. These include:

• Varicose Veins Powder: Formulated to support vein health and improve circulation.

• Body Development Powders: Designed to aid in physical growth and muscle building.

• Joint and Muscle Pain Powders: Effective in managing inflammation and pain for lasting relief.

Each powder is prepared using time-tested Ayurvedic principles, ensuring natural and safe solutions for health and wellness.

Client-Centered Approach

M. Prasad’s long-standing career is a testament to his commitment to client satisfaction. His therapies are designed to meet individual needs, providing personalized care that addresses specific health concerns. His ability to combine traditional Ayurvedic wisdom with modern therapeutic techniques makes him a sought-after professional in the wellness community.

For those seeking effective body therapy or Ayurvedic remedies in Hyderabad, M. Prasad’s expertise is just a call away. Reach him at 9985790618 to experience holistic care tailored to your well-being.

Public Guarantees Could Strengthen European Green Industry

Chethana Janith, Jadetimes Staff

C. Janith is a Jadetimes news reporter covering science and geopolitics.

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The United States and China have provided generous subsidies and tax incentives to develop their green industries. While the European Union lacks the fiscal firepower of these countries, the bloc’s policymakers can and should use public guarantees to support private investment in cleantech companies.

Image Source: (Ivan Romano/Getty)

Over the past two years, the European Union has made scaling up its cleantech sector a high priority. As European Commission President Ursula von der Leyen has emphasized, the sector is essential to the bloc’s economic competitiveness, energy security, and industrial leadership.

The EU has an innovation edge in several clean technologies, from green hydrogen to long-duration energy storage. But it is difficult to achieve commercial scale for these technologies on the continent. An investment gap of around €50 billion ($52 billion) must be filled to manufacture, by 2030, at least 40% of the solar and wind devices, batteries, heat pumps, hydrogen electrolyzers, and carbon capture and storage technology the EU must deploy.

When he presented his recent landmark report on European competitiveness, former Italian prime minister Mario Draghi succinctly summed up the problem: “There are too many barriers to commercializing innovations and scaling them up in the European Union.” In particular, the EU needs to develop new production methods and new methods of financing the construction of “first of a kind” plants, which require long lead times, access to large amounts of capital, and highly skilled labor.

The United States and China, recognizing that green industries can generate jobs and prosperity, have channeled billions of dollars into these sectors. US President Joe Biden’s Inflation Reduction Act, which offers tax credits for domestic cleantech production, is expected to unlock upwards of $3 trillion in private investment over the next decade, according to analysis by Goldman Sachs. China, for its part, has heavily subsidized its solar industry, among others.

The EU lacks the fiscal firepower of China and the US. So, instead of building these industries through generous subsidies and tax incentives, European policymakers must use government funds in a way that will crowd in private capital. That is where public guarantees come in.

Customers often expect companies selling technology that is unproven at commercial scale to issue extensive warranties in case the product does not perform as advertised. These warranties are backed by bank guarantees, for which firms are required to hold full collateral. But cleantech companies need comparatively high levels of investment to develop and expand their businesses, and holding large amounts of cash as collateral locks up capital that could be better spent building additional facilities, hiring and training workers, and fulfilling customer orders.

To ease this burden, the public sector could provide counter-guarantees, promising to reimburse part of any payout that a bank makes to a customer. Industry experts have advocated this instrument as a way to decarbonize energy-intensive industries and derisk investments in clean technologies. It also featured prominently in Draghi’s report, which calls on the EU to increase substantially “the use of guarantees … in support of strategic sectors of the economy.”

Public guarantees have already proven effective in scaling up cleantech innovation in Europe. In 2022, Bpifrance, the French public investment bank, guaranteed €51 million of financing for Verkor, a French battery manufacturer. The guarantee helped Verkor secure private investment and a commitment from Renault to source electric-vehicle batteries from the firm, enabling it to break ground on its first gigafactory, in Dunkirk.

These guarantees are highly efficient, with each euro of public money unlocking up to thousands of euros of working capital for innovators. For example, a €5 billion guarantee facility created by the European Investment Bank for companies in the wind sector will support up to €80 billion of new investment in this important renewable energy source.

Moreover, taxpayer money is spent only if a claim ends up being made, and the available evidence suggests that this is a rare occurrence. The International Chamber of Commerce estimates that the average loss rate for guarantees is between 0.2% and 1.7%. While the risk is higher for innovative technologies, it is a risk worth taking in order to support climate solutions that could reduce greenhouse-gas emissions and create green jobs and future tax revenues.

One positive development is that the EIB has proposed a €500 million counter-guarantee instrument for cleantech companies, pending approval by its board of directors in early 2025. If the EIB turns this pledge into a reality, some of the EU’s most promising cleantech companies will likely achieve financial viability, which would benefit the bloc’s economic competitiveness and be a boon for the planet.