The government has approved plans to transform Česká pošta, which will be split into two entities.

The plan was presented today by Interior Minister Vít Rakušan and Miroslav Štěpán, who is in charge of managing the state-owned enterprise. "Personally, I am glad that Česká pošta and cooperating experts from the Ministries of the Interior, Finance, and Trade and Industry have completed the transformation plan on time, and I greatly appreciate the approach of the other ministers who supported it yesterday and will participate in its implementation," said Vít Rakušan. Vít Rakušan considers the most important conclusions from the government's discussion of the Czech Post transformation plan to be the general agreement on the main goals of the transformation, the willingness to financially support Czech Post, and the clear definition of tasks for individual ministries resulting from the transformation project. "The objectives of the transformation of Česká pošta respond to new challenges brought about by technological and social developments, which the government and the state must address," said Vít Rakušan.

The transformed Czech Post will ensure communication with the state for anyone who is unable or unwilling to switch to digital communication. The Czech Post will thus ensure that people have access to physical state services and will be a point of contact for citizens wherever other authorities provide their services primarily in digital form.

Vít Rakušan identified the necessary digitization of public administration, the need to simplify the state agenda, and the need to reduce the state's operating costs as new challenges. The transformed Czech Post can help address the negative impacts on society associated with these challenges. "Even though digitization is gaining ground in all areas, there should also be an alternative, an omnipresent place where citizens can turn to state representatives. This place could be state infrastructure in the form of the Czech Post's branch network and its employees," said Vít Rakušan.

Separation of commercial servicesMiroslav Štěpán presented the main principles and measures of the Czech Post's transformation plan. He identified the main measures as the separation of commercial services, i.e., logistics and parcel services, into a new state-owned joint-stock company and the assignment of new tasks to the streamlined Czech Post by the state. According to this assignment, the transformed Czech Post will become a tool of the state, which in each region will:

• facilitate digital communication with the state for those citizens who are unable or unwilling to switch to digital communication, thereby eliminating their social and human rights disadvantages,
• remain the state's point of contact in all regions where state authorities are reducing their services as a result of digitization and cost-cutting measures,
• take over from state authorities the agenda that it will be able to provide for the state at lower cost or with greater convenience for citizens.

"The new public services that Česká pošta will provide will also generate new revenue, which will reduce the need for state funding of Česká pošta," said Miroslav Štěpán, citing as an example the takeover of the processing of applications for certain benefits from the Labor Office.

According to the transformation plan, another increase in the Czech Post's revenues will come from opening up its extensive infrastructure to all commercial entities that will provide services to citizens on a commercial basis. These may include banking, insurance, or logistics services. This development of services will also improve the quality of life of citizens, especially in small municipalities.

According to the transformation plan, both increased revenues and cost savings will bring about a turnaround in the Czech Post's financial performance. Miroslav Štěpán calculated that, according to the plan, increased revenues and savings should improve Česká pošta's operating results by CZK 12.4 billion between 2024 and 2026, compared to the operating results in the scenario where Česká pošta would not undergo any transformation and would only benefit from savings from closing branches and selling assets. According to the plan, revenues account for 75% of this amount and savings for 25%. The savings will be generated primarily by streamlining the operation of the central administration, centralizing logistics services, and other operational optimization measures.

Positive numbers
If the projected revenues and savings are fully realized, Česká pošta's operating results will turn positive as early as 2026. However, Miroslav Štěpán pointed out the difference between the operating result and the overall economic result, which will still be negatively affected by debt repayments and write-offs.

Capital depletion is the main reason why Česká pošta needs a financial injection between 2024 and 2025 to eliminate the potential threat of insolvency and successfully undergo the transformation process. Miroslav Štěpán stated that he expects Česká pošta to incur a cumulative loss of CZK 5.7 billion between 2018 and 2023, consisting of a negative operating result of CZK 4.2 billion between 2018 and 2022 and an expected loss of CZK 1.5 billion this year. Česká pošta is covering its losses by reducing its equity capital and has contracted loans from several banks to ensure its normal operations. The transformation plan assumes that CZK 4.5 billion will be invested by the state and up to CZK 2 billion will be obtained by Česká pošta from bank loans. "The state's contribution should be provided in the form of a CZK 2 billion increase in Česká pošta's registered capital, a CZK 1.5 billion transformation contribution, and a CZK 1 billion investment in a new state-owned logistics joint-stock company," Miroslav Štěpán specified.

The separation of logistics and parcel services into a separate state-owned joint-stock company will simplify access to financial resources for both entities (the remaining state-owned enterprise and the new joint-stock company). State or subsidy investments in the state-owned enterprise will not be perceived as illegal support for commercial logistics, and the new logistics joint-stock company will be able to obtain financial resources from share subscriptions, bonds, or subsidies. As a state-owned joint-stock company, it will also be prepared for the possible entry of a strategic partner.

Miroslav Štěpán also quantified the current positive trend in the Czech Post's financial performance, thanks to which the Czech Post's projected loss has been reduced from CZK 3.5 billion to CZK 1.5 billion compared to February's estimates. Half of the CZK 2 billion reduction was due to higher revenues from registered letters and half to cost-cutting measures.

Presentation by Czech Post – Transformation Plan

Ondřej Krátoška
Communications Department
Ministry of the Interior
press@mvcr.cz                                        

Matyáš Vitík
press secretary
Česká pošta
vitik.matyas@cpost.cz