[Closed] Royal Mail Shares

No

Isn't buying shares in Royal Mail a bit like buying something you already own but somebody has decided to sell on your behalf?

I'm not buying what I used to own.

If anyone's interested, I can also sell them 1% of their own house, for only £1000- but on condition that 99% of it will belong to someone else.

piemonster - Member
No
Isn't buying shares in Royal Mail a bit like buying something you already own but somebody has decided to sell on your behalf?
POSTED 4 MINUTES AGO # REPORT-POST
ohnohesback - Member
I'm not buying what I used to own.

Sir I shall ow remove my nose to spite my face....

They still the monopoly provider? What is the size of their pension black hole and how many lazy workshy union types do they have running stuff.

Those are the questions to ask.

It sounds like the house is to be sold anyway. - Will my £1000 be worth more in a few years ?

no, afraid I've invested all I could spare as a taxpayer to prop up the pension fund to make it saleable

still, at least we're not all being swindled

Worry not!

After sale I'm sure you'll still be propping up the business with subsidies which will be most probably more than we were putting into it in the first place, as per the railways.

I look forward to new colour-coded stamps going from white (first class to deliver within five minutes walk) to black (you'll be lucky if anyone will deliver it this century).

see thread about buying your own stuff back on eBay...

Looks like a lot of 'No's'.

Is this a moral stand or do you think the shares do not make financial sense ?

I think you're allowed to buy the shares but because of the strike they'll be delivered by DHL?

I'd be interested, given that 90% of the staff voted no to privatisation, how many of them accept free shares and buy any more.

It is sad to see it be sold off like this 🙁 [edit] or at all.

Not a moral stand, but I probably won't buy individual shares much more (did all the classic privatisations before).

I'll leave it up to the fund manager / index tracker manager. They'll have more insight as to whether it's a worthy investment. I do see TNT or DHL bidding for RM PLC in a few years.

Not enough details as yet to make a sensible decision. As Mike said earlier, lots of questions unanswered such as pension liabilities etc and the valuation. But given the sale will preceed an election, it is more likely that the sale will be "priced to go" than otherwise. But listing shares in the middle of a strike will be a novel experience!

But if privatisation is the evil that so many argue that it is and if it merely transfers wealth to the shareholders especially in the case of "natural monopolies" (who according to their nearest competitor today will enjoy a 20% VAT advantage among other things), you would be a fool not to, wouldn't you?!? 😉

I thought all privatisations were "priced to go" (ie, underpriced) to guarantee the success of the sale? I was a student during some of the big sell-offs and mates were taking out student loans just to buy privatisation shares with. All sold at profits, paid the loans off and still quids in.

marcus - Member

Is this a moral stand or do you think the shares do not make financial sense ?

Both. These individual shares quite possibly will make financial sense, but buying them doesn't, because it shows support for the concept of selling you your own stuff, and the greater the demand for the shares, the greater the success it will be considered to be, therefore the more likely they are to do it again.

Well the strike action will be interesting to watch. Imagine you are a postal service worker. You have to balance your opposition to privatisation (if the unions are correct) with a financial incentive that gives you:

1. Approx £2000 of free shares (and preferential rights to buy more)
2. Giving an annual dividend of £133p - so if you had to buy those shares this would be a yield of 6.7%, but you get them for free. Compare that with putting £2k in the bank?

Lets see what they do!

Not really buying what you already own. Where is my share certificate showing I own part of RM and Network rail as the result of me paying UK incomes tax several years ago, and because of my VAT payments every time I buy from CRC?

If I buy £1000 of RM shares, the taxpayers that like to think they own part of RM already, now "own" part of that £1000 in cash instead, which will be spent on other things (could be a tax reduction, could be paying off debts, could be to invest more in NHS). How that £1000 gets spent depends very much on the economy of the time. Greece for example will be using that to pay public sector staff and reduce debts.

Can't we just have a revolution and seize it instead?

I do see TNT or DHL bidding for RM PLC in a few years.

I'd like to think not. DHL et al want the big processing/sorting machines they can make money on. The manual labour bit of walking around popping things through letterboxes won't interest them. Splitting them could be the beginning of the end.

Given that TNT and DHL effectively own and run the Dutch and German mail services already? (and maybe others too)

edit: might be the other way around. Deutschepost buying DHL.

Worth a punt.

BG floated at £1.35 in 1986 and then split forming centrica in the '90s. The two companies shares are trading at around £16 today, thats before dividend.

Isn't buying shares in Royal Mail a bit like buying something you already own but somebody has decided to sell on your behalf?

Given it's something you already own, then presumably you're just paying yourself for it, so I don't see the problem.

Not really buying what you already own.

THM I hope they buy the shares then sell them and use the profit/free money to carry on striking 😉

I cannot see it improving the PO tbh

It's a risky one. Short term they are turning a fair profit at the moment and therefore could be a good income investment. Long term I think the money is going to be sucked into debt right down and ultimately the agreements they have in place with the postal offices is approx 8 years, after this expect it to be either sold on again, broken up or worst case run into the ground based on the release of the monopoly they have and increased competition.

The state (our representatives) are selling a majority stake (not all) of the Royal Mail on our behalf. The proceeds will be used for our benefit but in other ways. If we feel that this is the wrong option (shades of public sector pensions) some of us can strike, the others can hedge the decision by buying shares. But for most of us, I expect life will go on as normal.

broken up is more likely than run in to the ground, with different business areas sold to or merged with other companies.

given some of the services available elsewhere, it's very likely that there will be improvements, but they're not going to be next week, or next year.

Keeping the Royal Mail in its current form is unsustainable and anti-competition. I for one don't want my tax money subsidising it.

teamhurtmore - Member
But for most of us, I expect life will go on as normal.

unless you live in the middle of no where when your post services will suddenly become less frequent and/or much more expensive

or will that still require government subsidy to keep [s]prices down for the public[/s] ensure fat director bonuses

(see railways,BT etc)

Well Kimbers, you will have to have faith in the legal system. My understanding Is that universal service (6 days a week) is guaranteed in law. Correct me if I am wrong. Expensive? Lets see how the competing landscape shapes out?

The subsidy argument is interesting and I need to understand it better. But one of the arguments put forward by Uncle Vince is that the RM currently borrows of the government and unattractive rates. This seems odd but anyway. He argues that it will be able to finance itself better and cheaper as a private company. I need to read the case better though. Links anyone?

If they fail on the universal service side of things, the appropriate cabinet minister at the time will boost his career and do exactly the same as was done to seal Railtrack's fate, just to prove he has power. And then create a not for profit Network Post or something.

universal service (6 days a week) is guaranteed in law

Expensive?

You betcha, that's why City Link, DHL et al don't deliver Saturdays and if you live in the Highlands/Ulster/West Wales they charge extra to deliver.

The PO has been raped at will by governments of all colours to prop up tax receipts in the past instead of investing in the business. The local sorting office here (Ipswich) has to go on E-Bay to get parts for the machines that are obsolete. I can see why the unions are hacked off with the poor management in the past.

As well thought out a privatisation as the Railways IMHO. The taxpayer will get the pension fund liabilities and none of the gravy (the pension fund liability is fair enough given that the last Conservative Chancellor raided the fund (contributions holiday is a raid by any other name) and engineered the black hole.

I suspect it will be like the railways, gas, electric,

cheap daily postage/delivery options will be available, but the operators will do their best to make it overly complicated and staggeringly expensive outside a very small drop off/ pick up window

for example if you happen to be at work monday-friday 9-5 when they are delivering whats the bet youll have to start paying a fee to pick it up from the post office etc

So in summary, the quality of service may suffer but the shares should be worth a punt, providing the pension liability is offloaded to the taxpayer.

If I remember it correctly, the pensions issue was resolved or at least considerably lightened by the government a while ago (will sit with UK PLC), so that any privatisation or sale could actually happen.

Royal Mail consists of letters and parcels stuff, but with the majority of the parcels going through the profit making Parcel Force organisation. At some point, it is very likely that the parcels business will be sold off to a separate logistics organisation.

The letters business is the one that will be expensive to keep going so the cost of stamps will have to go up considerably for all mail, or longer journeys/more remote locations will have to be identified and priced differently.

Royal Mail as an organisation has lots of prime real land in the centre of towns and cities, but much of the actual buildings are old and crumbling and would need considerable investment.

Selling off Royal Mail does not include the Post Office network which will stay in public ownership.

The thing is though: even if you made a killing on the shares, to work out how much you'd really made you'd need to offset the RM pensions liabilities you now face as a taxpayer. How much would that be?

It must be great to be a government- offload those nasty pension debts for future generations of taxpayers, and make a short-term gain from a lucrative share sale. Immoral, IMHO.

Plenty of examples of that, c y b -- see public service pensions, welfare system, education, pensioner benefits, infrastructure projects galore, where the government of the day will prostrate themselves to win votes or at least curry favour with the voters, or voter groups, for the true bill and cost to be 'deferred' until the children of the beneficiaries are the ones that foot the bill.

LHS - Member

Keeping the Royal Mail in its current form is unsustainable and anti-competition

Unsustainable? Why?

Anti-competition? Are you under the impression that other carriers want to create a mass-volume, universal, largely unprofitable low-price mail service? Or for that matter, that other carriers have been unable to set up in direct competition for the desirable and profitable business? They have a monopoly only because they do something nobody else wants to do.

National mail is an essential service, national infrastructure is best nationalised because it's essential and because so much of it will always be unprofitable. But the trouble is some people insist on considering its value in terms of profit rather than in terms of service delivery, which is obviously false- mail supports business, the real value is in the contents not the stamps.

Here is the "official" view:

Still cant see why it will be cheaper for RM to access funding. It seems far more of an issue of competing for scarce government resources. This doc (on quick reading) seems to suggest that the RM need money for modernisation (true) but that has a lower priority that other gov projects, hence the need to sell it off so that it can raise private funding. That seems a subtle but important difference to how Uncle Vince spelt it out earlier to me!

for example if you happen to be at work monday-friday 9-5 when they are delivering whats the bet youll have to start paying a fee to pick it up from the post office etc

Kind of a bonus that stuff sent via DHL I collect from the post office not far from work, rather than some out of town depot 20km away.

And DP-DHL have automated "Packstations" in pretty much every town nationwide. Send or receive parcels via them 24/7/365. Cash on Delivery works on them too. I imagine UK might be more inclined to do deals with Esso/Shell and other locations for 24/7/365 parcel drop off and collection.

Loads of parcel shops too, for several couriers. One of my local ones happens to be a local bike shop 🙂 None have charged me an extra collection fee. UPS / GLS / FedEx / etc. all price that in to their fees.

And as for fees? Well DP-DHL charge a staggering €2 admin fee for their part of CoD. Which is drastically less expensive than RM's £8 admin fee to automatically collect duty+VAT on imports. (OK these aren't identical, but are close enough admin wise).

We can't afford it. The railways are costing us more now because we're seeing the true cost of what it takes to run a railway, especially one that was underfunded for decades by subsequent governments and has to play catch up in getting back upto scratch. Before privatisation the woefully inefficient and archaic network was being subsidised by ever increasing buckets of cash from the taxpayer - money down the drain and completely and utterly unacceptable.

The RM makes most of its money from commercial operations and not letters and our ebaying (the postman pat arm of its operation), and in that arena they're competing directly with the TNT's, Fedexs, and plethora of other couriers out there. It simply cannot compete under public ownership.

Where's this idea come from that just cause something is public owned its ok for it to be run any less efficiently and effectively than any private corporation that has to earn and justify its existence?

wobbliscott - Member

Before privatisation the woefully inefficient and archaic network was being subsidised by ever increasing buckets of cash from the taxpayer - money down the drain and completely and utterly unacceptable.

Yes, it's much better now that we pour twice as many bucketfuls down the drain, with extra bucketfulls to line corporate pockets, while ticket costs soar.

This truly is chaos. Over 400 million profit last year but need to be sold because of th e pension deficit. I work as a postman and although letters have dropped we are carrying more because jobs have gone and rounds have been broken up and added to others. Believe me royal mails packet and parcel business is incredible and that's not even taking parcelforce into consideration. At the moment the only way it's unsustainable is down to the pension black hole which was created please remember when royal mail took a holiday from their share of the contributions for 14 years. Yes 14 years of employer contributions lost. Someone should be jailed. I actually like my job but the management of this company is the pits. The free shares cannot be touched for 3 years whether they are worth anything or not. We have been told our contracts cannot be changed for 3 years,this I do not believe. Sorry times

I still treasure my free HBOS shares. Got em for nothing, and now that is what they are worth, bargain!

Well £400 million pounds sound like a lot of profit and Parcelforce may be an impressive organisation BUT its a drop in the ocean compared with FedEx and UPS and other competitors. FedEx and ups has fleets of aircraft larger than most of the worlds airlines. They have lorries and trucks in major towns and cities all over the world. Billions of pounds of investment is needed if Parcelforce and the RM is to succeed and thrive in the future. We can't afford that level of investment and under public ownership it would not be long before the RM would having to be propped up by the government. Anyway I believe the RMs recent profits have been boosted by property sales, so not exactly sustainable.

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