The potential new owner of Royal Mail has pledged to maintain the requirement to deliver letters throughout the UK six days a week. Czech billionaire Daniel Kretinsky, whose £3.6bn offer for Royal Mail has been accepted by its board, assured the BBC, “As long as I’m alive, I completely exclude this.”

Shareholders are expected to approve the deal in the coming months, but the government also has a say in whether it proceeds. Currently, the Universal Service Obligation (USO) mandates Royal Mail to deliver letters six days a week nationwide for the same price. There have been concerns about the potential reduction of this service in the future.

In an exclusive interview with the BBC, Kretinsky also expressed willingness to share profits with employees if the acquisition is approved. However, he seemed to dismiss the idea of employees holding a stake in Royal Mail, which unions have advocated for in exchange for their support.

The Royal Mail board agreed to Kretinsky’s £3.6bn takeover offer in May for the 500-year-old organization, which employs more than 150,000 people. Including assumed debts, the offer is valued at £5bn. Given Royal Mail’s national significance, the government has the authority to scrutinize and potentially block the deal.

In addition to gaining government approval, Mr. Kretinsky must also persuade postal unions that the proposed deal will benefit employees. The USO is a potential sticking point for both the government and unions.

By law, Royal Mail is required to deliver letters six days a week and parcels five days a week to every address in the UK at a fixed price. However, actual performance has lagged behind this mandate. Ten years ago, 92% of first-class post arrived on time, but by the end of last year, this figure had dropped to 74%, according to regulator Ofcom. Last year, the regulator fined Royal Mail £5.6m for failing to meet its delivery targets.

Royal Mail has been advocating for a reduction in this obligation. The company proposes cutting second-class letter deliveries to every other weekday, which it says will save £300m and result in “fewer than 1,000” voluntary redundancies.

Mr. Kretinsky has committed in writing to honoring the USO for five years. After that, theoretically, the new owners could abandon it. However, he assured the BBC, “As long as I’m alive, I completely exclude this, and I’m sure that anybody that would be my successor would absolutely understand this. I say this as an absolutely clear, unconditional commitment: Royal Mail is going to be the provider of Universal Service Obligation in the UK, I would say forever, as long as the service is going to be needed, and as long as we are going to be around.”

Mr. Kretinsky added that the written five-year commitment was “the longest commitment that has ever been offered in a situation like this.”

Another potential stumbling block for the deal is the company’s future structure. Unions are advocating for renationalization, but Dave Ward, general secretary of the Communication Workers Union (CWU), acknowledged that this would be “difficult in the current political and economic environment.” Instead, the CWU is pushing for a model where employees partially own the business. To support the takeover, the union wants employees to share ownership of the company, along with other concessions, including board representation for workers. They argue that profit sharing alone “is not going to be enough to deliver our support and the support of the workforce.”

If the union’s demands are not met, industrial action remains a possibility, as its members previously went on strike in 2022 and 2023. While Mr. Kretinsky is “very open” to profit sharing, he does not favor shared ownership. “I don’t think the ownership stake is the right model,” he said. “The logic is: share of profit, yes, [but an] ownership structure creates a lot of complexity. For instance, what happens if the employee leaves? He has shares, he is leaving, he is not working for the company, he [still] needs remunerating.” He emphasized that he preferred to “remunerate the people who are working for the company, and creating value for the company” rather than creating “some anonymous structure.”

The union is also concerned about job losses and changes to the terms and conditions of postal workers’ contracts. Mr. Kretinsky has guaranteed no compulsory redundancies or changes in terms and conditions, but only until 2025. “If we are more successful, and we have more parcels to be delivered, we need not less people, but we need more people,” he said. “So really, job cuts are not part of our plan at all.”

He said if the management, union, and employees work together, “we will be successful.”

Another concern is the potential break-up of the business. The profit for Royal Mail’s parent company last year was entirely generated by its German and Canadian logistics and parcels business, GLS. Royal Mail itself made a loss. Mr. Kretinsky has promised not to split off GLS or load the parent company with excessive debt, although borrowings will rise if the deal goes through.

Convincing the CWU remains a challenge. “I can’t think of any other country in the world that would just hand over its entire postal service to an overseas equity investor,” said Dave Ward of the CWU. However, Mr. Kretinsky expressed confidence that the postal unions “understand that we are on the same ship, and that we need this ship to be successful.”

While the union cannot stop the deal, the government has the power to block it under the National Security and Investment Act. Business Secretary Jonathan Reynolds has stated he will scrutinize the assurances and guarantees given and called on Mr. Kretinsky to work constructively with the unions.

Mr. Kretinsky believes that he and the unions are ultimately on the same ship, even if they are not currently on the same page.

Who is Daniel Kretinsky?

Daniel Kretinsky began his career as a lawyer in his hometown of Brno before moving to Prague. He amassed significant wealth through investments in Central and Eastern European energy interests, including Eustream, which transports Russian gas via pipelines through Ukraine, the Czech Republic, and Slovakia. He then diversified into other investments, including an almost 10% stake in UK supermarket chain Sainsbury’s and a 27% share in Premier League club West Ham United. The Czech businessman is worth about £6bn, according to reports.