According to the regulator, if some of the Royal Mail’s activities aren’t privatised then it will have to start receiving subsidies. For instance, the group looses £270m (US$526.5m) a year on Saturday postal deliveries, which it can ill afford.
The regulator said private sector involvement would bring in management expertise and much needed investment.
This has triggered speculation that the government might seek out private equity involvement in the Royal Mail as occurred with the Danish postal service, which went on to see dramatic operational improvements as a result.
However, such a move in the UK would prove controversial and could trigger industrial action by postal workers.