Summary of Postal Privatization in Europe & Key Lessons Alex Kalevi Dieke, WIK Rutgers Workshop on Postal Reorganization Washington, D.C., 6 April 2012 0 Who is WIK? . WIK (‘Scientific institute for infrastructure and communication services’) Independent research institute, owned by the German government ~ 40 consultants/researchers 30 years of experience with economic regulation and sector policies Telecommunications, postal and energy markets . WIK-Consult is a 100% subsidiary of WIK Consultancy specialised in regulated industries, founded in 2001 ~ 60% of revenue from customers outside Germany 1 Corporatization and Privatization in the EU All EU public operators are corporatized, some are privatized Corporatization: Transform state post into a company Post Danmark and Posten AB merged (joined under normal commercial ownership by Danish and law (usually a plc) Swedish State Privatization: Sell equity in PostNL state post to third parties (0% gov’t) (strategic investors or list at stock exchange) bpost (50.1% gov’t) Goals of privatization: − Enhance profitability and end or limit subsidies − Promote efficiency of operations − Enable the post to Deutsche Post DHL Österreichische Post Malta Post respond faster to market (30.5% gov’t) (52.8% gov’t) (0% gov’t) changes 2 Privatization of PostNL (Netherlands) Revenues (in m EUR) EBIT (in m EUR) Employment (headcount) 20,000 2,000 200,000 16,000 1,600 160,000 12,000 1,200 120,000 8,000 800 80,000 4,000 400 40,000 0 0 0 3 Privatization of Deutsche Post DHL (Germany) Revenues (in m EUR) EBIT (in m EUR) Employment (headcount) 80,000 8,000 800,000 60,000 6,000 600,000 40,000 4,000 400,000 20,000 2,000 200,000 0 0 0 -2,000 4 Privatization of Österreichische Post (Austria) Revenues (in m EUR) EBIT (in m EUR) Employment (FTE*) 4,000 400 40,000 3,000 300 30,000 2,000 200 20,000 1,000 100 10,000 0 0 0 -100 5 FTE = Full Time Equivalents Privatization of bpost (Belgium) Revenues (in m EUR) EBIT (in m EUR) Employment (headcount) 4,000 800 80,000 3,000 600 60,000 2,000 400 40,000 1,000 200 20,000 0 0 0 -200 6 Effects of Privatization Effects on post Effects on government . Commercial business objectives . Reduced direct control over postal . Greater commercial flexibility operations − Financing: Access to capital markets . Concentrate on political objectives for postal legislation, not commercial − Expand into other products/markets . Privatization is opportunity to take stock − Labor relations like any large (and transfer ‘excessive” historical enterprise (but not government) liabilities to government) − Buying: no need to comply with . Different role for postal legislation public procurement regulations − Universal service: ensure all population . Management motivated better with is served at defined quality standards private sector salaries & bonuses . Accountability & risk of failure − Price regulation: Control market dominance & possible abuse 7 European Experience with Privatization . All privatized posts . Privatized posts stress massive change of corporate culture modernized their operations & network substantially Clearer service attitude & focus on (large) customers became more profitable Profit contribution key measure of sought new business lines success on all management levels maintained universal service (as . Two models of privatization was required) IPO / list post at stock exchange Reduced employment in core business, but without mandatory Strategic investors (pursued by redundancies smaller posts) . Some privatized posts expanded into . Privatization seen as a success in all foreign markets – mixed results four countries (Deutsche Post, TNT) 8 Alex Kalevi Dieke WIK GmbH Postfach 2000 53588 Bad Honnef Germany Tel +49 2224-9225-36 Fax +49 2224-9225-66 email [email protected] www.wik.org .