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The sale of Royal Mail’s parent company to a Czech billionaire has been cleared by the government.
The £3.6bn takeover by Daniel Kretinsky’s EP Group has been given the go-ahead after agreeing “legally binding” undertakings.
The government will retain a so-called “golden share” that will require it to approve any major changes to Royal Mail’s ownership, HQ location and tax residency.
EP Group will also have to maintain the one-price-goes-anywhere Universal Service Obligation (USO), which currently means it has to deliver letters six days a week, Monday to Saturday, and parcels Monday to Friday.
The company has committed to maintaining the USO for as long as it owns Royal Mail.
The USO is currently under review, with Royal Mail suggesting to regulator Ofcom that reducing second-class deliveries to every other weekday would save up to £300m a year and give the business “a fighting chance”.
Ofcom chief executive Dame Melanie Dawes told the BBC there were “real questions about what the service needs to be going into the future”.
Given letter numbers are falling “we have to think about what is economical”, adding Ofcom would be publishing plans next year “to make sure it is sustainable”.
The takeover of Royal Mail’s parent company, International Distribution Services (IDS), is expected to be completed early next year.
IDS also owns a highly profitable European parcels business called GLS which made over £300m last year. This offset losses at Royal Mail, allowing IDS to report a small profit.
Royal Mail, which was split from the Post Office and privatised a decade ago, has seen its performance deteriorate in recent years, leading to heavy financial losses.
The volume of letters being posted in the UK has plummeted, with half the number being sent compared to 2011 levels.
Last week, Royal Mail was fined £10.5m by the regulator Ofcom for failing to meet delivery targets for first and second-class mail.
Ofcom’s Dame Melanie Dawes told the BBC it was up to the new ownership to deliver on improvements and the regulator would “absolutely” hold Royal Mail to account.
Jenny Hall, director of corporate affairs at Royal Mail, told the BBC the company was investing to improve performance, but it was “really important” the USO was reformed to reflect consumer trends.
The price of a second-class stamp, which is currently 85p, is regulated by Ofcom, with the amount Royal Mail can increase it by each year tied to inflation.
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