MaltaPost gets ‘provisional approval’ for further tariff increases in 2014 and 2015

Maltapost has acquired the 'provisional approval' from the Malta Communications Authority (MCA) to introduce further tariff increases during its financial years 2014 and 2015. 

According to the MCA, the proposed increases were considered in a decision published in November 2012, which approved increases in the postal service last year, and further substantial increases which came into force as of last Monday.

"These increases have only been provisionally approved as they are still subject to further analysis and are dependent on market developments and other considerations at the given time," an MCA spokesman told MaltaToday, when enquiring about the motivations behind the MCA's approval of such increases, which are also set to increase business costs.

The increases were introduced despite MaltaPost registering a pre-tax profit of €2.6 million in September.

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

As of last Monday, MaltaPost has announced the following rates:

- For letters weighing up to 50 grams, the new postage rate will be €0.26.

- For letters weighing above 50 grams and up to 100 grams, the new postage rate will be €0.32

- For letters weighing above 100 grams and up to 2Kg, the new postage rate will be of €0.32 with an additional €0.20 for every 50 grams.

In November, domestic registered mail was increased to 90c, up from 49c while domestic bulk letter mail was raised by 5c for letters weighing less then 50 grams, 4c for letters weighing between 50 grams and 100 grams and 11c for letters up to 2kg.

The MCA said that  the postal sector was liberalised as from 1 January 2013, meaning that the sector is open to competition, where other players are free to start offering services to the general public, but no secondary players have since put forward any offers to compete in the postal service.

In explaining its motivations behind the postal tariffs approvals, the MCA said that one of its primary objectives is to ensure that a distinct set of postal services or products are made available to all Maltese consumers. 

"At present, MaltaPost is the only service provider having the obligation at law to guarantee the provision of these services. Such services are referred to as universal postal services".

The MCA added that before approving such tariffs last November, the Authority underwent a "thorough and complex analytical exercise, including a public consultation, to ensure that the proposed tariffs were justified and that tariffs remained affordable in view of the importance of such services."

The MCA said it considered the sustainability of universal postal services to ensure that all Maltese citizens continue to enjoy these services in the long-term.

Until 2011, MaltaPost was earning a fair and reasonable return on universal postal services overall, although domestic letter mail and mail registration were recording systematic losses. Cross-border mail (i.e. foreign inbound mail and foreign outbound mail) was contributing significantly to these profits.

However, as from January 2012, MaltaPost started incurring higher costs to deliver foreign outbound mail while earning less revenues from foreign inbound mail due to changes in the terminal dues. 

These changes were the result of significant international developments under the Universal Postal Union framework regulating fees paid between National Post Operators for the delivery of cross-border mail.

The MCA said that "coupled with a downward trend in the volumes of domestic mail, put increasing pressures on the long-term sustainability of universal postal services and were the principal drivers for the tariff increases".

In MaltaPost's annual report, Chairman Joseph Said hailed the company's "satisfactory set of results" but said that the profit before tax for the financial year amounting to €2.06 million, when compared to the €3.05 million of the previous year, resulted in a decrease of earnings per share.

On 4 March, the Malta Communications Authority granted a new licence to MaltaPost.The new licence replaces the current licence that MaltaPost plc has as provided for in the Schedule to the MaltaPost Plc Licence (Modification) Regulations.  The latter licence expires on 30 April. The new licence issued to MaltaPost Plc comes into effect as of 1 May 2013 and authorises MaltaPost Plc to provide all postal services within the scope of the universal service as well as outside the scope of the Universal Service.