MaltaPost to retain postal monopoly despite liberalisation

National postal operators MaltaPost plc will be retaining their monopoly despite an impending liberalisation of the market in January 2013, as required by EU legislation.

The Malta Communications Authority has told MaltaToday that it intends to renew MaltaPost's designation as the company responsible for the daily collection and delivery of postal items, which is enshrined in its Universal Service Obligations, without issuing an international tender.

Formerly government-owned before the liberalisation of the postal department, MaltaPost is now a fully privatized company owned by Lombard Bank.

The MCA will not be issuing a tender as has happened in previous liberalisations of government services such as public transport or the public lotto. In both case the tender was awarded to foreign bidders, Arriva and Maltco respectively.

The collection and delivery of postal items on a daily basis is one of the universal obligations performed by MaltaPost in its role Malta's designated Universal Service Provider (USP).

"The assignment can be carried out directly and in the particular case of a yet-to-be-liberalised sector such as the postal service, it is evident that there is nobody else capable of carrying out the USOs currently incumbent on MaltaPost," a spokesperson for the MCA told MaltaToday. 

The assignment of universal service obligations (USOs), unlike that of other postal services, is carried out by legal notice on the basis of advice by the MCA, and this will remain the case up until the market is fully liberalised in January 2013.

While everyone will be able to apply for a license to carry out postal services on an equal footing, MaltaPost is set to retain its "obligation" to carry out the daily collection and delivery of postal items. This is because the MCA believes that at this stage nobody else is able to carry out the obligations presently carried out by MaltaPost.

But this could change in the future when other operators become more established in Malta.

"Over time, as the sector picks up, there may be alternatives and at that point one can consider the feasibility of assigning the USO, or parts of it, to alternative operators," the MCA said, adding that it will periodically carry out an assessment through which it will "question the need for the assignment of the USO on a postal operator in the process, if market forces are seen to be satisfactorily addressing a particular public need."

Government has the power to ensure continuity of the universal services in a situation where MaltaPost, as the incumbent designated USP, ceases to provide a universal service for any reason other than, industrial action or other force majeure, or if it goes into liquidation or is declared bankrupt.

This will be retained in the new system because such continuity is necessary for users to enjoy an uninterrupted universal service

What will change in January?

The full market opening of the postal sector in Malta will take place on the 1 January 2013.

The market was already partly liberalised when new players were allowed in the postal market in the 1990s. In 2006, Lombard Bank purchased all previous owner Transend's shareholding in MaltaPost and eventually bought an additional 25% from government, making it majority shareholder with a 60% stake.

MaltaPost was completely privatised in January 2008 through a share offer of 11.2 million shares of a nominal €0.25c share value, offered at a price of €0.50c per share - releasing 40% of MaltaPost market capitalisation of €14 million.

While MaltaPost's current licence is due to expire on 1 May 2013, the MCA will grant MaltaPost a new individual licence upon expiry. The new licence will put MaltaPost at par with other operators, enabling it continue providing postal services.

What will not change is that MCA is set to remain the designated provider of USOs, since the thrust of the new rules is the 'decoupling' of the universal service obligation from the licence award: the two procedures (licence to provide postal services and USO imposition) can no longer be one and the same in a liberalised environment.

A universal service obligation is not comparable with a licence to provide postal services, although the current MaltaPost licence is drawn up in this fashion, stipulating both its USOs and its postal licence.

The existing licensing structure distinguishes between postal operators providing services within the scope of the universal services, and a designated universal service provider like MaltaPost.

Other licensed postal require a licence from the MCA. MaltaPost's licence as the USP was instead issued by government in the form of a legal notice.

Following the full market opening of the postal sector, all postal operators as well as the designated USP will be issued with an identical individual license.

So what will change effectively is that MaltaPost will now be treated like any other operator with regards to its other business activities that not covered by the legal notice designating it as a USP.

But unlike other liberalisations like that of the public lotto, the issue cannot be addressed through the issue of an all-encompassing tender, as everyone who applies has to be granted a licence.

"A licence in a liberalised environment cannot be seen as a franchise (such as the lotto franchise) precisely because a franchise is anathema to liberalisation. In a fully liberalised postal sector, anybody can apply for a licence to operate postal services and under the right conditions, be granted that licence. MaltaPost's request for a licence will be granted, just as anybody else asking for a licence will be satisfied," the MCA said.

The MCA is also proposing to extend the term of the licence for the provision of postal services from the existing 10-year period (currently fifteen years in the case of MaltaPost) to an indefinite term.

A definite licence term for the provision of postal services is not required. "The MCA cannot restrict the number of licences issued for the provision of services within the scope of the universal services. Furthermore, the provision of postal services, unlike for example the rights of use of radio spectrum, does not require the grant of any exclusive use of scarce resources. Therefore, there is no need for a licence granted to a postal operator licensed to provide services within the scope of the universal service to be subject to renewal."