Royal Mail to benefit from Whistl’s blow

ROYAL Mail was handed a lifeline yesterday after its arch- rival ditched plans for an aggressive UK expansion programme.

Whistl, formerly called TNT Post, already delivers business post such as bills to households in dense urban areas across London, Manchester and Liverpool.

Royal Mail has complained about the model, saying the Dutchowned firm has cherry-picked the most lucrative areas.

The former state-owned postal service is tied to a contract to deliver mail to the whole of the UK and relies on high- density areas, which are very profitable, to subsidise the cost of deliveries to sparsely- populated rural areas.

Whistl planned to launch in Edinburgh, Glasgow and Birmingham. But to fund that, its Dutch owners PostNL required £70m.

It was in talks with Lloyds Bank’s private equity arm LDC to raise it, but yesterday said plans were ‘on hold’ after the talks broke down. PostNL said: ‘Now discussions have concluded, we will assess alternative scenarios for Whistl’s operations and remain committed to further developing Whistl’s successful activities in the UK.’

Royal Mail shares rose 5.3pc to 23.5p higher at 467.7p. The development is a victory for Royal Mail, which previously warned MPs that Whistl’s expansion plans threatened the company’s Universal Service Obligation.

Analyst Angus Tweedie said: ‘ Royal Mail management... believed the roll- out of services by Whistl in the UK could result in a £200m revenue decline by 2018.

‘However, with LDC no longer committed to extending the network to this level of coverage it is unlikely the revenue impact will be this severe.’