TNT set to lose mail delivery monopoly
TNT NV, Europe's second-biggest express-delivery service, may lose its monopoly on mail delivery in the Netherlands next year after the Dutch parliament approved opening the market to competitors.
The law will allow any company to carry letters and parcels of all sizes as of Jan 1, provided there is a 'level playing field' in Europe, the Dutch parliament said on Tuesday in a statement on its website.
'Now we'll just have to see how fast this goes,' said Thijs Berkelder, an analyst from Petercam in Amsterdam with a 'buy' recommendation on the stock. 'How fast will TNT's competitors seize the big contracts?'
TNT, which traces its origins to the 1752 founding of the Dutch Republic's state postal service, has made acquisitions abroad to prepare for European Union (EU) plans to abolish national letter-carrying monopolies by 2009. The company plans to cut as many as 7,000 jobs at the mail unit, or 5 per cent of its total workforce, as competition erodes earnings and people use e-mail instead of sending personal letters.
The government opened the Dutch market for handling mail items weighing more than 50 grams in 2000, retaining TNT's legal monopoly on lighter items. The two main opposition parties, the Socialist Party SP and the conservative party VVD, voted against the proposal.
'This means we can go forward,' Pieter Schaffels, a spokesman for TNT, said. 'There will be a European mail market, which offers us more opportunities than threats.'
Germany is 'the key' to the liberalisation of the European market, according to Mr Schaffels, who also said Germany 'tends to lean towards France', which wants to delay the opening of the market.
Chief executive officer Peter Bakker said on April 11 after the parliament's initial debate that he was concerned about 'more and more signals' that Germany's government won't adhere to a plan to allow full competition on letter deliveries in that country by Jan 1.
Press reports in Germany in the past two months have said officials may hold up opening that country's letter deliveries until all other EU countries liberalise their markets. Deutsche Post AG, Europe's biggest postal service, has a monopoly in Germany on handling letters of less than 50 grams.
German Economy Minister Michael Glos said on March 26 that Germany's government will terminate the monopoly next year as planned. The Handelsblatt newspaper on Tuesday reported that regulators may agree to extend the member countries' monopolies to allow members such as France more time to anticipate free competition.
TNT net income in 2006 rose 1.7 per cent to 670 million euros (S$1.38 billion) on a 7.8 per cent sales gain to 10.1 billion euros. The mail unit's earnings before interest and taxes of 18.7 per cent of sales were at the 'high end of expectations', although a decline from the 19.6 per cent margin of 2005, TNT said in February.
TNT is fighting increased domestic competition from companies such as Apeldoorn, Netherlands-based Sandd, which was founded in 2000. Sandd set a target in February of raising its share of that part of the market to 16 per cent from 12 per cent last year.
The law will allow any company to carry letters and parcels of all sizes as of Jan 1, provided there is a 'level playing field' in Europe, the Dutch parliament said on Tuesday in a statement on its website.
'Now we'll just have to see how fast this goes,' said Thijs Berkelder, an analyst from Petercam in Amsterdam with a 'buy' recommendation on the stock. 'How fast will TNT's competitors seize the big contracts?'
TNT, which traces its origins to the 1752 founding of the Dutch Republic's state postal service, has made acquisitions abroad to prepare for European Union (EU) plans to abolish national letter-carrying monopolies by 2009. The company plans to cut as many as 7,000 jobs at the mail unit, or 5 per cent of its total workforce, as competition erodes earnings and people use e-mail instead of sending personal letters.
The government opened the Dutch market for handling mail items weighing more than 50 grams in 2000, retaining TNT's legal monopoly on lighter items. The two main opposition parties, the Socialist Party SP and the conservative party VVD, voted against the proposal.
'This means we can go forward,' Pieter Schaffels, a spokesman for TNT, said. 'There will be a European mail market, which offers us more opportunities than threats.'
Germany is 'the key' to the liberalisation of the European market, according to Mr Schaffels, who also said Germany 'tends to lean towards France', which wants to delay the opening of the market.
Chief executive officer Peter Bakker said on April 11 after the parliament's initial debate that he was concerned about 'more and more signals' that Germany's government won't adhere to a plan to allow full competition on letter deliveries in that country by Jan 1.
Press reports in Germany in the past two months have said officials may hold up opening that country's letter deliveries until all other EU countries liberalise their markets. Deutsche Post AG, Europe's biggest postal service, has a monopoly in Germany on handling letters of less than 50 grams.
German Economy Minister Michael Glos said on March 26 that Germany's government will terminate the monopoly next year as planned. The Handelsblatt newspaper on Tuesday reported that regulators may agree to extend the member countries' monopolies to allow members such as France more time to anticipate free competition.
TNT net income in 2006 rose 1.7 per cent to 670 million euros (S$1.38 billion) on a 7.8 per cent sales gain to 10.1 billion euros. The mail unit's earnings before interest and taxes of 18.7 per cent of sales were at the 'high end of expectations', although a decline from the 19.6 per cent margin of 2005, TNT said in February.
TNT is fighting increased domestic competition from companies such as Apeldoorn, Netherlands-based Sandd, which was founded in 2000. Sandd set a target in February of raising its share of that part of the market to 16 per cent from 12 per cent last year.