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Royal Mail requests stamp price rise

27/02/2007

Royal Mail has requested a six pence rise in the cost of its UK stamps to help it survive in an increasingly competitive market.

In proposals to the postal industry's independent regulator, Postcomm, Royal Mail is expected to request a rise in the price of stamps in order to stop the firm's loss of profits. Currently Royal Mail loses six pence on each stamped letter it handles.

The proposals to Postcomm are thought to include the end of the universal service obligation (USO) for businesses which frank their mail. Instead the USO will only apply to stamped mail.

Prices are currently 32p for first class and 23p for second class stamps.

Speaking to the Financial Times newspaper today, Adam Crozier, Royal Mail's chief executive, warned of proposals' "urgency".

"This is not scaremongering in any shape or form, you can see that when you look at [Royal Mail's] financial numbers," he said.

However despite the reported urgency of the requested price hike, it is not clear when the prices would increase if Postcomm decide to allow the move.

Royal Mail's current pricing agreement with the regulator does not expire until 2010 although there is an opportunity to revise the measures in April 2008.


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