11 Jul 2013

Royal Mail to be privatised

10:42 am on 11 July 2013

The Royal Mail in Britain is going to be privatised. The government has announced plans for a stock market listing rather a sale to a private buyer.

Members of the public will be able to buy shares, alongside larger institutional investors.

Business Secretary Vince Cable said employees would be given 10% of shares.

It's expected that the Royal Mail will raise $US3.7 billion, which would be the biggest privatisation in Britain in decades.

"This government will give Royal Mail the real commercial freedom it's needed for a long time," Mr Cable said.

The government says the sale is necessary in order to give Royal Mail the access to private capital it needs to grow and remain competitive.

It is currently revamping its business to focus less on the delivery of letters and more on parcels, in order to benefit from the rapid growth of internet shopping.

The BBC reports a boom in parcel delivery helped Royal Mail to more than double its profits last year, after many years of losses.

The Communication Workers Union said it would fight the sale and warned that strike action was "inevitable". The CWU represents about two-thirds of Royal Mail employees. Earlier this year, its members voted overwhelmingly against privatisation.

The Netherlands was the first country in Europe to privatise its postal service, in 1989. The service is known as TNT.

Germany also started a privatisation programme in 1989 and eventually listed the mail service in 2000.