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German Firm to Deliver British Mail

August 28, 2002

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LONDON (AP) _ Germany’s Deutsche Post on Wednesday became the first foreign postal service to win a license to deliver mail in Britain, in a warm-up to stiffer competition for this nation’s beleaguered mail operator.

Postcomm, the postal regulatory agency, said it awarded the one-year license as a small step toward opening the British market to overseas competitors. The license lets Deutsche Post handle up to 40 million pieces of mail a year, just half the amount delivered each day by Britain’s national carrier, Consignia.

More competitors are on the way. Postcomm is reviewing a license application from Dutch postal service TPG, and it has already awarded temporary licenses to 10 British companies, including Hays Commercial Services Ltd., Securicor Omega Express Ltd. and TNT UK.

The government plans in January to begin awarding longer, seven-year licenses to overseas firms, and by April 2007, Britain is to have a fully competitive market for mail.

Postcomm sees the introduction of foreign and domestic competition as a way of pushing Consignia to streamline its operations. Consignia has struggled to cap rising costs and trim its work force. It lost 1.1 billion pounds ($1.7 billion) for the year ended in March.

``We know competition is coming into the marketplace, and we’re preparing for it,″ the company said, though it offered no specific comment on Postcomm’s awarding of a license to Deutsche Post.

Consignia wants to cut 30,000 jobs from its staff of 220,000 over the next three years. It also plans to save 350 million pounds ($539 million) a year by ending its twice-a-day mail service and charging customers extra for letters delivered before 9 a.m.

Postcomm said the temporary licenses are designed to prevent competitors from having a serious impact on Consignia’s current ability to deliver mail six days a week and at a uniform price.

Deutsche Post Global Mail (UK) Ltd. will be limited to handling mail in bulk units of 4,000 items. Around 90 percent of this mail will be passed on to Consignia for delivery, with Deutsche Post allowed to deliver the remaining 10 percent itself.

But the German firm’s parent company, Deutsche Post World Net, sees Britain as one of Europe’s most attractive markets, and it plans to apply for a long-term license to deliver mail here as soon as one becomes available, said Deutsche Post spokeswoman Ina Quilling, speaking from her office in Bonn, Germany.

Deutsche Post World Net already owns a majority stake in the international mail service DHL International and has a postal joint venture in the Netherlands. Deutsche Post issued its first shares to the public in 2000, and is owned 69 percent by the German government.

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