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December 4, 2011 4:49 pm
Deutsche Post chief warns on sell-off difficulties
By Gerrit Wiesmann in Bonn
Selling state-owned postal companies such as the UK’s Royal Mail has become “hugely difficult” given competition from private operators and the decline of letter volumes due to the proliferation of email, the head of Germany Deutsche Post DHL has warned.
In comments that will add to a fierce debate about the future of postal systems in the UK and US, Deutsche Post chief executive Frank Appel told the Financial Times that structural changes had all but closed the “window” of opportunity, which Germany and other countries used to start selling their former monopolists slightly more than a decade ago.
“With letter volumes in decline, I think it’s very difficult to sell or privatise postal companies now,” Mr Appel said during an interview at the Bonn headquarters of Deutsche Post DHL, which has turned itself into one of the world’s leading mail and logistics groups since the German government floated on the stock market in 2000.
“There was a window [to privatise] in the 90s,” he said. “But now you have to restructure [the company] before you can think about selling. That’s hugely difficult.”
With the shrinking letter delivery business of US Postal Service losing billions and that of the UK’s Royal Mail millions every year, executives and policymakers on both sides of the Atlantic are desperately trying to get the companies back on their feet.
While the US is trying to find ways to slash costs, the UK government wants to help the Royal Mail restructure with a view to a sale or stock market flotation by 2013.
But Mr Appel suggested this approach was different from Germany’s in the 1990s, when it pushed Deutsche Post to restructure using profits from its then monopoly.
“Other countries did it the other way round, deregulating in the hope that turning up the heat on former monopolists would be enough to change them,” he said. “But that didn’t work, because the companies found they didn’t have the means [to restructure].”
As a result, Mr Appel all but dismissed the idea that Deutsche Post would ever be interested in taking a stake in Royal Mail. He said the German group would need so much protection against “downside” risks as to make the idea “a no-go politically”.
“Sure, I could imagine taking a minority stake and providing management expertise. The government could keep 70-75 per cent,” he said. “But I’d also need the guarantee that I can sell again after five years at the initial price. Just as I’d promise the government a chance to profit from the upside, I’d need protection against the downside.”