Cash on demand
Polish Post (PP) must be privatized in order to both fend off foreign competition and be fully prepared for forthcoming reforms, according to analysts hired by the service.
Their report, which was recently presented to the company's board, says floatation on the Warsaw Stock Exchange (WSE) "is the easiest way to obtain cheap capital necessary to develop the firm."
The team of accountants and industry experts had been asked by PP to evaluate the service in the light of upcoming market reforms.
Reality is hitting Poland's national courier hard as it readies itself for complete liberalization. Currently, PP holds a monopoly over significant portions of the market. For instance, it delivers all letters weighing 50 grams and under-a tremendous advantage over its competitors.
When that advantage disappears in 2009, the firm will be hard pressed to compete against other postal services already present in Poland, including Germany's Deutsche Post, Holland's TPG and Britain's Royal Mail. With PP's penchant for overstaffing and overspending, these competitors could snatch up one- to two-thirds of PP's market share, meaning the courier could lose as much as zł.330 million.
To prevent this looming disaster, the company could raise between zł.1.9 and zł.3 billion from the sale of its shares.
A simple stock sell-off won't spell the end of PP's problems, however. To compete, expenditures will have to go too, and that means job cuts. Employee costs account for up to 60 percent of the company's expenses. Around 104,000 people are employed in the company, including 94,600 in full time positions. For an efficient national courier, that's 30 thousand too many.
And there's little hope of PP raising revenues from other sectors. The national courier only holds 2.3 percent of the express package market-down from an already measly five percent in 2000-and its prices are sky-high. Competitors like Stolica, Szybka Paczka and Masterlink offer prices of zł.27, zł.27.50 and zł.35 respectively for a 10 kilo domestic express delivery. Pocztex, the express wing of Polish Post, charges a whopping zł.40 for the same service.
No decision on privatization has been made as of yet, but the Ministries of Finance and Treasury are said to favor the idea.
Their report, which was recently presented to the company's board, says floatation on the Warsaw Stock Exchange (WSE) "is the easiest way to obtain cheap capital necessary to develop the firm."
The team of accountants and industry experts had been asked by PP to evaluate the service in the light of upcoming market reforms.
Reality is hitting Poland's national courier hard as it readies itself for complete liberalization. Currently, PP holds a monopoly over significant portions of the market. For instance, it delivers all letters weighing 50 grams and under-a tremendous advantage over its competitors.
When that advantage disappears in 2009, the firm will be hard pressed to compete against other postal services already present in Poland, including Germany's Deutsche Post, Holland's TPG and Britain's Royal Mail. With PP's penchant for overstaffing and overspending, these competitors could snatch up one- to two-thirds of PP's market share, meaning the courier could lose as much as zł.330 million.
To prevent this looming disaster, the company could raise between zł.1.9 and zł.3 billion from the sale of its shares.
A simple stock sell-off won't spell the end of PP's problems, however. To compete, expenditures will have to go too, and that means job cuts. Employee costs account for up to 60 percent of the company's expenses. Around 104,000 people are employed in the company, including 94,600 in full time positions. For an efficient national courier, that's 30 thousand too many.
And there's little hope of PP raising revenues from other sectors. The national courier only holds 2.3 percent of the express package market-down from an already measly five percent in 2000-and its prices are sky-high. Competitors like Stolica, Szybka Paczka and Masterlink offer prices of zł.27, zł.27.50 and zł.35 respectively for a 10 kilo domestic express delivery. Pocztex, the express wing of Polish Post, charges a whopping zł.40 for the same service.
No decision on privatization has been made as of yet, but the Ministries of Finance and Treasury are said to favor the idea.
