Royal Mail proposal for a modern & sustainable USO

International Distributions Svc PLC

30 April 2024

 

30 April 2024

Royal Mail's proposal for a modern and sustainable Universal Service Obligation

International Distributions Services plc ("IDS" or the "Company") is delivering a modernisation and transformation programme for Royal Mail that is bringing clear operational and financial improvements. The Company has been clear, however, that for Royal Mail to reach its full potential there must also be reform of the Universal Service Obligation ("USO").  

IDS is today releasing a pre-recorded presentation outlining details of Royal Mail's vision of a modern and sustainable USO. The presentation provides investors an opportunity to learn more about the Company's detailed submission to Ofcom on its proposed reforms, which would deliver a more efficient, reliable and financially sustainable service.  

The presentation is available at www.internationaldistributionsservices.com/en/investors/possible-offer-for-ids-plc-by-ep-corporate-group-as/ and covers the following areas:

The need for urgent USO reform given the structural decline in letters

·      A modern USO is required to reflect an environment of declining letter volumes and evolving customer priorities

·      The current USO is over-specified and financially unsustainable, with Ofcom recognising the heavy financial burden of £325-£675m per year in net costs

Royal Mail's proposal, designed to deliver positive stakeholder outcomes

·      A clear and detailed proposal for USO reform based on extensive modelling and analysis of customer priorities

·      Underpinned by three key principles: good for customers and growth; good for financial sustainability and good for our people

·      Will continue to deliver a one-price-goes-anywhere Universal Service and a choice of First and Second Class services, with First Class letters still delivered six days a week

·      Quality of Service (QoS) is also proposed to be reformed to balance speed of delivery, reliability and cost

The benefits of USO reform, enabling further transformation and modernisation

·      If implemented, the proposal will create a more efficient, reliable and financially sustainable Universal Service that is more closely aligned to customer needs

·      With swift and full implementation, Royal Mail's proposal would reduce the net cost of the Universal Service by up to £300 million per year

·      The net cost saving will be delivered through a net reduction in daily delivery routes of 7,000 - 9,000, with fewer than 1,000 voluntary redundancies expected

Martin Seidenberg, Group Chief Executive Officer of IDS plc, commented: "Following extensive modelling and analysis of customer priorities, we have delivered to Ofcom a detailed proposal for Universal Service reform that is designed to be good for our customers and for growth, good for financial sustainability and good for our people.

"We have been calling for reform for more than four years and the lack of action by Government and Ofcom has held back Royal Mail's transformation. Ofcom has started the process of reform with its recent Call for Inputs and has said it will provide an 'update' in the summer. Given the urgency, we call on Ofcom to accelerate their review and start consulting on changes without delay to give our customers, our people and our shareholders the certainty they need."   

Enquiries:

Investor Relations

John Crosse

Email: [e-mail]

Media Relations

Jenny Hall

Phone: [phone]

Email: [e-mail]

Greg Sage

Phone: [phone]

Email: [e-mail]

Royal Mail press office: [e-mail]

Company Secretary

Mark Amsden

Email: [e-mail]

 

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