Romanian Post privatization awaits reorganization plan

Online money transfer is one of the services offered by the Romanian Post. Theoretically, once a form is completed, the addressee could receive the money in a matter of minutes, but in real life things don't work like this. Customers have to stay as long as 40 minutes in a seemingly endless line in front of the counter to watch piles of forms and documents be completed by the postal worker, choked by internal bureaucracy. It is a scenario recognized even by MCTI officials, who say the national postal service must be privatized.
Iuliu Winkler, MCTI minister, told Business Review that for the moment, the consultancy for the privatization is suspended and the ministry is still working to reorganize the company. This comes as reports surfaced that the Austrian Mail Service was interested in the Romanian Postal company.
The Post's reorganization plans have been drafted by the consultancy firm Roland Berger, which was selected in January this year to devise the strategy under a contract worth EUR 1.8 million. It must be delivered in 18 months.
“At the end of last month, Roland Berger presented us with the reorganization plan for the privatization of the company. They presented us with several options which the MCTI is now studying. I can tell you that around October 15th we will give the government the final proposal for the reorganization of the National Postal company,” said Winkler.
The reorganization documents are eagerly awaited, even by the postal union representatives. “We are still waiting for the Roland Berger study. But we are not in a hurry. The example of the Romtelecom privatization is still fresh: 70 percent of the employees were forced to find new jobs. We will have to discuss with the authorities the result of this study and its social and financial implications,” said Matei Bratianu, president of the Mail and Communications Union Federation (FSPC).

Reorganization priorities
Although the union leaders have made clear their intentions, ministry officials say that staff restructuring is not a top priority in the reorganization process.
“The personnel restructuring isn't the most important element of the reorganization. The modernizing process, and I am referring to the investments in the mail sorting centers in Bucharest and Cluj, the analysis of the actual structure of the company, and of potential new services are, in my opinion, more important aspects of the company reorganization. Regarding the personnel, we will have a calendar for this reorganization by next year,” said Winkler.
According to CNPR reports the number of employees grew constantly in the last years from 33,888 in 2004 to 34,855 in July 2007.
The national postal company has recently taken out a loan of EUR 50 million from the European Bank for Reconstruction and Development (EBRD) to build the first electronic center for mail sorting in Bucharest and update the center in another large city, Cluj. The project has a total value of EUR 60 million. The loan was taken out for eight years with a grace period of two years.
“Building electronic centers is an essential element in modernizing the company which is now facing stronger competition following the opening of the mail services market, under EU regulations,” said Dan Mihai Toader, general manager of CNPR.
According to CNPR's financial data this year, the investment budget planned is EUR 26 million compared to EUR 6.6 million in 2005 and only EUR 4.1 million last year. The results expected by the company officials must be impressive: EUR 300 million compared to EUR 250 million last year.
These are great expectations for a company that is considered a colossus of bureaucracy on a highly competitive market. This is one of the reasons why Post representatives decided to increase the advertising budget. “This year the sum that will be spent on these services is EUR 3 million compared to EUR 2 million last year,” said CNPR representatives.

Private sector competition remains fierce
The Romanian Post privatization comes at a time of increasingly competitive postal and delivery services. The main players include DHL, Curiero, TNT, UPS and Pegasus. In total, there are 262 firms in Romania active in postal services. The top ones have announced that in the next years they will make significant investment to consolidate their market share. “The company's main investment in 2007 was the launch of the first dedicated cargo aircraft in Romania,” said Bogdan Obretin, commercial manager at DHL International. The company intends to expand its vehicle fleet by an additional 120 units by the end of 2007 and to increase its retail presence by 20 percent on the Romanian market. Obretin says that the first half of this year indicates a growth in turnover of over 30 percent on the same period of 2006.
Representatives of Curiero, another player on the postal services market, said that this year's investments will reach more than EUR 3 million. “We plan to invest this year EUR 3.2 million in all IT systems,” said Bogdan Carcu, president of Curiero, which plans a turnover of EUR 16.6 million this year, from just EUR 8 million in 2006. According to him, for the next years the company intends to increase the number of destinations and services in Romania and make regional acquisition, possibly from Bulgaria, Hungary, Ukraine and the former Yugoslavia, said Carcu.
The private player's officials said that a significant moment in their development will be the liberalization of the market. “The opening of the postal services market in Romania from 2009 will modify the business strategies of CNPR,” said the president of Curiero.
Specialists estimate that during the next years the postal delivery services market will register an approximate 20 percent to 30 percent year-on-year growth rate. It remains to be seen what market share will CNPR have.

Dana Ciuraru

Read more about

Vodafone grows in Romania. More subscriptions vs. prepaid SIMs, growing revenues

read more