Preparing for an open market Presentation at the panel n 1 Second High-Level EC conference. Valencia 29 April 2010

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1 Preparing for an open market Presentation at the panel n 1 Second High-Level EC conference Valencia 29 April 2010

2 Contents Market opening for efficiency, quality and innovation From fix to variable costs Towards privatisations and consolidation Conclusion

3 Market opening for efficiency, quality and innovation Efficiency Incumbents go on investing in sorting automation and sequencing, savings follow natural attrition Quality Automation helps continue improving D+1 quality Demand for priority mail, and transaction mail generally, decreases, threatening the profitability of investments New entrants introduce new quality definition, like time certain without daily delivery, followed by some incumbents excluding bulk mail from USO Innovation e-post is there: e-stamps, hybrid mail, e-invoicing for senders and receivers Track-and-trace and automation improve the attractiveness of parcels and registered mail PricewaterhouseCoopers Preparing for an open market EC HLC Valencia 29 April 2010 Slide 3

definition, like time certain without daily delivery, followed by some incumbents excluding bulk mail from USO Innovation e-post is there: e-stamps, hybrid mail, e-invoicing for senders

4 Contents Market opening for efficiency, quality and innovation From fix to variable costs Towards privatisations and consolidation Conclusion

5 From fix to variable costs -Post offices are adopting more and more franchise or agency model, allowing a better accessibility (geography and schedule) with minimal fix costs New entrants introduce flexible delivery costs, with part-time workforce, franchises, variable pay They now get followed by a few incumbents, with new status for delivering sequenced mail using optimised routes A critical issue remains the social competition: what kind of employment will the open postal market offer, away from the still dominant model of civil servants? Flexible full-time employments, or part-time mail delivery men? In some member states there is a need for Minimum wages Exclusion of self-employed Collective labour agreements PricewaterhouseCoopers Preparing for an open market EC HLC Valencia 29 April 2010 Slide 5

issue remains the social competition: what kind of employment will the open postal market offer, away from the still dominant model of civil servants?

6 Contents Market opening for efficiency, quality and innovation From fix to variable costs Towards privatisations and consolidation Conclusion

7 Towards privatisations and consolidation TNT in the Netherlands totally privatised, started in 1994, active investments in mail in Germany, UK, BE, LU, CEE, IT Deutsche Post-DHL in Germany largely privatised(69%), started in 1995, acquisitions in the mail business in Spain (Unipost), US, FR, NL (Selekt Mail), Japan, UK Norden, merge of Posten and Post Denmark Belgian Post : 50% -1 shares to CVC, with expected IPO Austria successful 49% IPO in 2006 Other IPO s announced New status for La Poste, expected for Royal Mail PricewaterhouseCoopers Preparing for an open market EC HLC Valencia 29 April 2010 Slide 7

Mail), Japan, UK Norden, merge of Posten and Post Denmark Belgian Post : 50% -1 shares to CVC, with expected IPO Austria successful 49% IPO in 2006

8 Towards privatisations and consolidation level playing field: VAT issue commercial freedom USO definition in each member state? single letter mail? Focus on partial privatisations for Financing the modernisation Transfer of know-how Distancing from political management and civil servant status Easing the change Threshold of 50% for the state remains, for how long? how to ensure Universal Service provision with private operators? Will the sector consolidate at European level like in Energy and airlines? PricewaterhouseCoopers Preparing for an open market EC HLC Valencia 29 April 2010 Slide 8

Easing the change Threshold of 50% for the state remains, for how long? how to ensure Universal Service provision with private operators?

9 Contents Market opening for efficiency, quality and innovation From fix to variable costs Towards privatisations and consolidation Conclusion

10 Conclusions Open market still a way to go European mail strategies being questioned Member states at different levels of readiness Uncertain future: pace of e-substitution? direct mail? Effective competition? Better meeting customer expectations PricewaterhouseCoopers Preparing for an open market EC HLC Valencia 29 April 2010 Slide 10

e-substitution? direct mail? Effective competition?

11 Thank you In case you would have any comment, please feel free to contact me: Philippe Claeys Phone : philippe.claeys@pwc.be 2009 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers.

PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International

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