The Israeli government’s ministerial privatization committee voted to sell off stakes of the state-owned Israel Post on Monday, in a bid to restore profitability – but raising concerns that service to outlying areas could be affected.
Some 40% of the embattled Israel Post is expected to be sold in two stages. The first 20% is to be auctioned to an Israeli or foreign strategic investor – with the initial investor being assured preferential rights, including the selection of CEO. That buyer would agree to keep the take for seven years.
The finance ministry said in a statement that the second 20% would be sold to the public, making Israel Post a publicly-traded company on the Tel Aviv Stock Exchange. If no private investor emerges, all 40% of the company could be sold on the exchange.
This would still leave the state as the majority stakeholder with some 60% of Israel Post.
The finance ministry initially wanted to separate Israel Post from its postal banking services, but in the end the two services will remain in the same body.
Israel Post has struggled in recent years to break a profit and restore cash flow. While the company barely returned to the black in 2016 and 2017, it lost some 420 million shekels ($115 million) in 2015 and ran in the red for three years prior, according to the Israel Post and Knesset Research and Information Center.
Since 2015, Israel Post has adopted streamlining measures, laying off employees in a bid to restore profitability.
Revenue in the firm has stagnated around 1.8-1.9 billion shekels for much of the past decade, amid a shift by the public towards e-billing and private shipping services.
It is possible that intervention from private investors could force Israel Post to improve the quality of its services, amid regular complaints from customers that letters and packages never arrive at all and that people are forced to wait in long lines at the post office.
But an emphasis on profits could undermine the breadth and depth of the postal service – jeopardizing delivery to towns in the geographic periphery and rural areas.
It remains unclear what if any safeguards will be put in place so the partially-privatized company continues servicing all parts of the country, regardless of the cost.
