TNT Post and other private postal groups could quit Britain if Royal Mail is turned from a "public monopoly into a private monopoly" when it is privatised, regulator Ofcom will be warned this week.
Nick Wells, chief executive of TNT Post in the UK, said that the government could "fatten up" Royal Mail by bolstering its market position at the expense of its rivals to get a better sale price.
The postal services bill, which is going through Parliament, will see the state-owned postal group sold off and will overhaul the regulatory regime governing competition in the postal market.
TNT Post uses Royal Mail's postal workers for the "final mile" to deliver bulk and direct mail to homes and handled 3.3bn items this year. Half of all mail that Royal Mail delivers for its competitors comes from TNT Post.
The Dutch group is concerned in particular that Royal Mail will not be required in future to automatically give it and other rivals access to its delivery network, handing the state-owned group a potential monopoly. The wording of the bill only requires Royal Mail to allow rivals to use its postal workers and letter boxes if it benefits consumers and competition.
"We do not want to run the risk of it [access] being offered at the discretion of Royal Mail," Wells said. "If it was up to them and they tried to weasel out of it, it would have a very negative impact on us. We feel it should be mandated, otherwise it could turn out the lights of every player currently in the marketplace."
He suggested the new regulatory regime could be set up to give Royal Mail greater market share to boost its future profits and its value when it is sold off. According to a recent investment bank valuation, Royal Mail is worth between £700m and £5.7bn depending on factors such as regulation.
"If someone is going to buy this company they will say 'you let us decide on access'. What we are saying is 'do not turn the public monopoly into a private monopoly'. Are they [the government] fattening it up for privatisation?"
Wells will meet Ofcom board members on Friday to outline his company's concerns on market access and also on Royal Mail's VAT exemption. Royal Mail is exempt from charging VAT to its customers while private sector operators are not. This exemption costs the Exchequer an estimated £200m a year in tax revenue. Wells said that if this exemption was lifted, it would make it economically viable for TNT Post to employ its own postal workers to deliver post directly to homes, rather than use Royal Mail's.
