Royal Mail: Czech billionaire set to clinch takeover deal

Royal Mail, which was split from the Post Office and privatized a decade ago, is legally obliged to deliver a one-price-goes-anywhere “universal service”, which means it has to deliver letters six days per week, Monday to Saturday, and parcels Monday to Friday.

But the company’s performance in recent years has deteriorated, leading to heavy financial losses.

Customers have also complained about deliveries, with important medical appointments and legal documents not delivered on time.

The volume of letters being posted in the UK has plummeted too, with half the number being sent compared to 2011 levels.

Meanwhile, parcel deliveries have become more popular – and more profitable.

Parent company IDS made a small profit last year which was entirely generated by its German and Canadian logistics and parcels business, off-setting losses at Royal Mail.

The universal service obligation is currently under review, with Royal Mail suggesting to the regulator Ofcom that reducing second-class deliveries to every other weekday would save up to £300m a year and give the business “a fighting chance”.

In an interview with the BBC earlier this year, Kretinsky said as “as long as I am alive” he would honour the universal service obligation – but was in favour of the Royal Mail’s suggested reforms.

The Department for Business has also been contacted for comment.