Royal Mail stamp prices could continue to surge in the coming years, its potential buyer Daniel Kretinsky warned over the weekend.
Kretinsky, known as the ‘Czech Sphinx’, warned that costs at the postal company could continue to spiral in the medium term.
'I can't make unconditional commitments. If your circulation is 50 per cent of what it was… you either need to go home, or you need to increase the unit price and hope that people will pay for it,” Kretinsky explained in an interview with the Sunday Times.
Over the last two years, Royal Mail has burnt £1 million every day, but is saved by its sister company GLS, the overseas delivery firm, which makes enough to roughly offset the losses.
“You can be lossmaking for a year or two, but you can’t be in a loss for 20 years. It’s simple maths,” the Czech billionaire added.
“Our absolute mantra is that we want to increase Royal Mail market share.
“If we don’t deliver this, if we don’t deliver a better service to the British population, our plan has failed. And we can go home.”
Should the sale of International Distributions Services PLC (LSE:IDS), Royal Mail and GLS’s parent company, be approved, Kretinsky has promised to invest £400 million.
Part of this cash injection is expected to help the Royal Mail develop its “out-of-home delivery solutions”, which use delivery lockers and pick-up spots rather than posting packages directly to residences.
Kretinsky’s £3.6 billion offer for the company is expected to be met with investigations by regulators to make sure that certain aspects of Royal Mail are protected.
Neither Conservative nor Labour politicians have outright objected to the takeover, but following the conclusion of the election, the winning party is expected to lay out some roadblocks for Kretinsky.