An Post ‘losing out’ in row on stamp pricing

An Post has claimed its financial position has deteriorated as a result of delays by the Communications Regulator in dealing with its application for an increase in the price of postage stamps.

A major row has broken out between the State-owned postal service and ComReg over its application for a 18% price increase which was submitted last February.

An Post claims that ComReg has had “more than sufficient information” to make a decision to grant or refuse the increase for several months, although it still has to stage a public consultation on the issue.

However, ComReg claims it has been necessary to seek details about An Post’s latest projections about its worsening financial situation since it first applied for a price increase. It claimed An Post could run out of money within two years given its cash balance decreased to €150m at the end of 2011.

Relationships between the two State bodies were already strained after ComReg launched a legal action against An Post over its failure to achieve target delivery times for standard mail.

The latest controversy arises from an application by An Post for a 10c price increase in the cost of the standard 55c postage stamp submitted to ComReg last February.

The company lost €50m in its role as provider of a universal postal service in 2011 — a figure which is expected to increase to €60m this year.

An Post has claimed that it will no longer be able to fund such losses from its other activities as it has done in the past, particularly because of a sharp fall in mail volumes. It is estimated standard mail levels have decreased by 30% over the past five years.

An Post pointed out it received a reply from ComReg last May which stated that it appeared “sufficient information” had been provided by An Post to process the application.

In a letter last month, the company accused ComReg of unnecessary frustration by seeming to link the price increase application with a review of its compliance with accountancy regulations.

In another letter to ComReg chairperson, Alex Chisholm last month, An Post chief executive Donal Connell stated: “The manner in which this application has been dealt with by your organisation is causing real difficulties for An Post.”

In response, Mr Chisholm noted that An Post was aware it was suffering funding problems in the summer of 2011 but waited until last February before seeking a price increase. He also rejected the suggestion that ComReg had sufficient information to appraise the application.

ComReg further expressed concern that An Post will still be in serious financial difficulty even if the 10c increase is approved. It is estimated the price increase will generate just €17m extra in revenue.