Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
Postman Pat rose to stardom, much like Clark Kent, as an ordinary, mild-mannered guy just trying to do his job. For Postman Pat, his job was delivering the mail. That is, until the year 2000, when the Royal Mail terminated Pat because he “no longer fit the corporate image.” At the time the postal workers’ union described the termination as “a disgrace.”
The good news is that Postman Pat has gone on to greater fame and fortune with his Special Delivery Service. In fact, he will be starring in a new feature-length film scheduled to be released in May 2014.
Mind you, I don’t have all the inside details, but I must ask the question, “Was the day of Postman Pat’s disenfranchisement the real beginning of the Royal Mail’s problems?” Methinks there is more to this story than has been told. Once Pat was booted, the post office began to be an albatross hanging around the Treasury’s neck. It all seems to add up to me.
The question on my mind now is “Will the new, privatized Royal Mail Group (LSE:RMG) find the same success in the real world that Postman Pat has. It’s an exciting first day for the Royal Mail out on the street, but we must remember that Postman Pat left with an untarnished image.
On the other hand, the Royal Mail Group IPO is going quite well on its first day, with shares having been sold at 330 pence. Sales have been strong, to say the least, with some buyers making an admirable gain as the shares are now trading at 440 pence. Even I can do that math. That is a spot-on 33% increase of 110 pence. And activity has been brisk, with nearly 190 million shares having been traded by 2:30 pm.
Some excited, some concerned
There is excitement in some corners today that the government has made a nifty £3.3 billion on the sale. Others, however, who had already believed that the offering was too low, watched their point being made, because, as the record now shows, the government could have made close to another billion pounds on the sale. But, it’s only money. What would the government possibly do with another billion?
The Labour Party’s Shadow Business Secretary, Chuck Umunna, said that “Royal Mail is being sold off on the cheap with taxpayers being shortchanged to the tune of hundreds of millions of pounds. Yet out of touch ministers have plowed on regardless and claimed this is a ‘triumph’. Increasingly this privatization is looking like a botched job from an out-of-touch government that puts the wrong people first.”
A high-ranking official with the Communication Workers Union (the people who said that Postman Pat’s release was a disgrace) told BBC Today that “Vince Cable, one of the cleverest men in British politics, has made one of the stupidest decisions he is ever likely to make as a politician.”
What lies ahead
If you are a regular ADVFN reader, you know that I do not place a lot of value in speculation and forecasting the future. In fact, Vince Cable seems to agree with me at the moment. He said that “You get an enormous amount of froth and speculation in the aftermath of a big IPO of this kind. It’s of absolutely no significance whatever. What matters is where the price eventually settles.”
However, just because the mail has gone public, does not mean that all of its woes are bygone. One of the first problems that the RMG faces is an imminent strike by postal workers. They have already voted, but the results will not be announced until next week, with a potential strike occurring within a matter of a week.
Efficiency is always a postal problem and RMG is going to have to deal with existing inefficiencies. If, in doing so, they eliminate work force redundancies, they may be delivering the mail down some rocky roads.
The business is also going to need to transform itself as the faces of technology and commerce continue to evolve. The volume of flat mail is decreasing by about 5% per year. The saving grace is that small package delivery is on the increase by a slightly higher percentage. It seems that what the post office is losing to email, it is gaining from ecommerce. Someone has got to deliver all those things we are ordering online. It’s either going to be Postman Pat’s Special Delivery Service or the Royal Mail Group. Wouldn’t it be great if they worked together again?
What does the future hold? We’ll have to wait and see. The only thing we know for sure is that some people made a bundle of money today – on paper at least.
