Britain aims to privatize mail service

LONDON — The Royal Mail can trace its history back 500 years to the time of Henry VIII, and its bright red ‘‘pillarboxes’’ grace streets across the UK — from the Scilly Isles to Scotland.

But change is coming as the British icon seeks to compete with the likes of FedEx and UPS.

The UK’s coalition government laid out plans Wednesday to privatize the Royal Mail.


Analysts have speculated that the company could be worth $4.5 billion. The government plans to sell a majority stake but it has yet to decide on the exact amount, choosing to leave that to market conditions.

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‘‘This is logical,’’ Business Secretary Vince Cable told the House of Commons. ‘‘It is a commercial decision designed to put Royal Mail’s future onto a long-term, sustainable basis.’’

Tens of thousands of Royal Mail workers will be able to buy shares in the company, and the government plans to retain a stake, opening the possibility it will sell more shares in the future.

Although the red pillarboxes are protected by law, there are concerns that other parts of the Royal Mail — such as a six-days-a-week delivery service — may be under threat once it has to make its way profitably in the private sector.

The Communications Workers Union, which represents Royal Mail workers, opposes the sale because of fears of potential job losses.


There are also concerns that investors may be reluctant to buy knowing that the new company would operate under a constant threat of industrial action.

Cable tried to assuage fears on Wednesday, claiming that privatized delivery services in Austria, Germany, and Belgium all ‘‘produce profit margins far higher than the Royal Mail but have continued to provide high-quality and expanding services.’’

Nonetheless, there are also worries the Royal Mail’s quest for profit may mean remote — and therefore higher-cost — communities in the UK will not get the same service as cities and towns.

Associated Press