DM services set for boost as Royal Mail sell-off gets green-light

The Government is expected to announce details of the privatisation of Royal Mail later today (10 July), paving the way for the mail operator to ramp up its marketing services.

Royal Mail

Business Secretary Vince Cable is expected to outline the flotation in a statement to MPs. It is said the business will be valued at more than £2bn.

In an interview with The Telegraph, postal services minister Michael Fallon says a sell-off will “give it [Royal Mail] commercial freedom and future access to capital that a company of its size needs”.

It is likely the cash injection will allow it expand its marketing services operations, the revenue from which has helped offset the decline in income from letters.

Revenue from its letters division increased by 3 per cent in the 12 months to 31 March, with an increase in addressed and unaddressed marketing mail offsetting the 8 per cent drop in the volume of letters.

Full-service direct marketing service MarketReach is also set for expansion. Royal Mail credited the business, launched in July 2012 to convince brands of the value of direct marketing, in its annual report as helping to mitigate the impact of letters decline.

Its parcel business will also be given greater prominence. Revenue from parcels delivered on behalf of online retailers already accounts for almost half of all receipts.

At least 10 per cent of shares are expected to be offered to staff. The Communication Worker’s Union, however, are opposed to the sell-off and have threatened strike action if the terms of their members employment change.

The sell-off will not include the Post Office, which will remain tax-payer owned.

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