Finally the political silence has been broken. The Labor manifesto promises that the proposed £3.6 billion takeover of Royal Mail by ‘Czech Sphinx’ Daniel Kretinsky and lesser-known business partners will be properly scrutinized.
Someone has been listening to Dave Ward, general secretary of the Communications Workers Union (CWU), in an interview and as City’s guest columnist on these pages.
Unlike the lame-duck management of the Royal Mail, which surrendered at the first smell of cordite, the union recognized that it would be a big mistake to allow a utility company, which had been part of the national furniture since the 16th century, to come under overseas ownership would fall.
Successive top executives have blamed unions for hindering modernization and weakening the company. In representing its members, the CWU was not easy to deal with.
The board, led by BA exile Keith Williams, should never have thrown up its hands in horror and accepted the assurances of its largest shareholder Kretinsky.
Review: Labour’s manifesto promises the proposed £3.2bn takeover of the Royal Mail by ‘Czech Sphinx’ Daniel Kretinsky and lesser-known associates will be properly investigated
Her job was to defend a dysfunctional but major British institution and prevent it from falling under the spell of debt-fueled foreign owners with controversial connections.
The water industry shows that such mixed marriages end up down the drain, regardless of investment commitments.
At the heart of Royal Mail is its universal service obligation. Amid declining snail mail volumes, from 20 billion to 7 billion letters per year, a new model was needed.
Ofcom and the company’s German CEO, Martin Seidenberg, have come up with ways to future-proof the service.
Instead, the board is selling from under their feet. Labor is now offering to come up with a new business and governance model that gives workers and customers more power.
Preferably, this will be done in the context of a publicly traded company, rather than through a half-baked public ownership proposal.
The possibility of government intervention should stop the takeover scheme. Kretinsky should refocus his attention on the Euro 2024 footie.
Little chance
BT was the growth company that survived the General Post Office’s ownership. But like its stepsister at Royal Mail, the company is under siege by foreign investors.
The latest to join the already extensive share register is Mexican billionaire Carlos Slim, who heads a Latin American telecoms giant worth £40 billion.
He joins telecom titans Patrick Drahi, with a 24.5 percent stake and a debt problem, and Deutsche Telecom, with 12.5 percent. It is making paper losses of £3.5 billion.
The arrival of Slim has blindsided BT. Chairman Adam Crozier should reach out to understand his intentions.
Slim probably knows that seeking complete control would be counterintuitive. Telecom networks are part of national security.
BT serially underperformed. There are two poison pills: a persistent pension fund deficit and a requirement for an expensive fiber-to-the-door broadband network.
Under the new leadership of Allison Kirkby, the group finances are healthier.
Shares have risen 25 percent since Kirkby took over, wielding the ax by cutting burdensome global services and scaling back capital spending.
Still, shares are well below pre-pandemic levels and Slim sees upside.
Labour’s intervention in the Royal Mail deal suggests that a shake-up of BT, of one or more of the key players, will get short shrift.
Ukraine gamble
After months of wrangling, the advanced countries of the G7 in Puglia, Italy, have figured out a way to funnel money into Ukraine.
They have agreed to leverage rising interest on around £235bn of frozen assets to plug a £40bn funding gap.
It is still unclear which banks will provide the loans and whether or not they will attract some kind of state guarantee.
There were fears that seizing Russian assets could put a dampener on China, Japan and others who had Western currencies in their reserves.