Royal Mail shares have fallen sharply after regulator Ofcom gave more details of its review into the business.
Ofcom said in June it would start a review of how Royal Mail was regulated, and in a new discussion document the regulator said it would assess the company’s efficiency, look at its position in the parcels sector and consider its potential ability to set wholesale prices in a way that might damage competition. Ofcom added:
In addition, the review will address the implications of [rival] Whistl’s withdrawal, which represents a significant change in the potential level of competition for end-to-end letter delivery.
The news has sent Royal Mail shares down 17p or 3.2% to 510p.
Update:
Royal Mail has responded to the Ofcom announcement:
Royal Mail will continue to participate fully in Ofcom’s review. In particular we will be highlighting the need for a consistent approach to regulation. Ofcom’s existing framework, put in place in 2012 was to have provided certainty for seven years. Royal Mail believes it has used the commercial freedoms granted by Ofcom in a responsible and appropriate manner to help secure the financial sustainability of the Universal Service in the face of significant ongoing change across the postal market.
