May 13 - Even Margaret Thatcher didn't go there but that's not stopping the current British government as it plans to sell off the Royal Mail in an IPO next spring. But as Ivor Bennett reports, profits may be hard to deliver.
There's over 100-thousand throughout the UK - each one with a royal crest. But Britain's famous red post boxes may not be Britain's for much longer. The Government wants to sell them off - along with the post offices - in plans to privatise the country's postal service: the Royal Mail. It's hoping to raise between 2 and 3 billion pounds through an IPO next spring. Parcel2Go CEO James Greenbury thinks the company may struggle in the long-run. SOUNDBITE (English) JAMES GREENBURY, CEO, PARCEL2GO, SAYING: "The letter business everyone agrees is in decline. So Royal Mail probably has to make its future out of parcels. But that's an incredibly competitive business and it's not clear to me that Royal Mail can maintain a strong market share in that given that their cost structure is really high." SOUNDBITE (English) IVOR BENNETT, REUTERS REPORTER, SAYING: "In the age of e-bills and online statements, posting a letter is fast falling out of fashion. And you can tell this from the post boxes. This is the only one on the street; it hasn't been emptied in nearly 24 hours; yet when I post my letter, I can hear that it's practically empty." At the last count, the number of letters posted in Britain was down by 9 percent. And industry experts warn letter volumes could fall by as much as half in the next ten years. For now though, Royal Mail IS making money. Postage price hikes of nearly 40 percent saw half-year profits rise to 150 million pounds last year. But further stamp increases are pegged to inflation meaning profits could shrink. While the parcel market is still growing, competition is fierce...with international couriers like DHL and Fed Ex dominating the market. But privatisation expert Joseph Lampel thinks Royal Mail could put up a fight. SOUNDBITE (English) JOSEPH LAMPEL, PROFESSOR OF STRATEGY AND INNOVATION, CASS BUSINESS SCHOOL, SAYING: "Royal Mail could compete very effectively with these companies if it adapts almost like a Ryanair or more like an Easyjet strategy. In other words, it could become a low-price, low-quality provider. Now the reason why I say nobody would like to say it at this point because politically it's a very difficult thing to accept." The Royal Mail's currently required by law to deliver 6 days a week to every address in the UK. It's a law the government's promised to keep. But many are still against the plans to privatise. SOUNDBITE (English) UNIDENTIFIED WOMAN, SAYING: "It's never a good idea is it? Why not? Because the prices go up and you don't get the service." SOUNDBITE (English) UNIDENTIFIED MAN, SAYING: "The service is very good and I don't see why we should change it." SOUNDBITE (English) UNIDENTIFIED WOMAN, SAYING: "It's an institution really. It's been going for so long now and people depend on it." Founded nearly 500 years ago, the Royal Mail's the oldest delivery company in the world. But it's that history which makes privatisation all the more difficult. Even Margaret Thatcher refused to sell off the Queen's head as she famously put it. After all, this is a country where traditions die hard.