So who thought a debt-fuelled takeover of Royal Mail by a secretive Czech billionaire was a good suggestion asks ALEX BRUMMER

A naive belief that ownership of the Royal Mail by a secretive Czech billionaire would transform the postal service is being shattered.

Almost a year has passed since Daniel Kretinsky seized control of Royal Mail in a highly indebted takeover supported by Labour and the often-fractious Communications Workers Union (CWU).

War in the Gulf won’t help. It will mean the interest rate bill for the new owners will stay higher for longer than hoped for, and climbing fuel bills will raise operational costs.

Despite fundamental reform of Royal Mail regulation, designed to make first-class delivery reliable and profitable, service has gone backwards since Kretinsky’s EP Group took control.

Service to consumers has deteriorated. Delivery targets set by the regulator Ofcom have been missed. Promises of new investment, particularly in parcel deliveries, have not materialised.

And relations between the postal unions and management have gone into reverse.

Junk mail: Daniel Kretinksy, known as the Czech sphinx, has been summoned to explain himself before the business and trade select committee on March 26 

Regulator Ofcom is thought to be frustrated by the stewardship of the new owners. Despite meeting with Kretinsky and Royal Mail, progress has been negligible. 

The failure to meet the pledges made to government at the time of the takeover and public frustration at poor service has reached the Commons.

Kretinsky, known as the Czech Sphinx, has been summoned to explain himself before MPs on the Commons’ business and trade select committee.

The latest Ofcom monitoring shows that in the first nine months of the financial year just 77.5 per cent of mail posted with a £1.70 first-class stamp arrives next day, as required by the Universal Service Obligation (USO), against a target of 93 per cent.

Royal Mail, which was fined a record £21million in 2024, faces an even bigger penalty this year.

There is equal anger among consumers about second-class mail, often including birthday cards, notes of condolence and other items of personal importance which stack up in sorting offices.

Some 91.6 per cent are being delivered within the specified time of two to three working days (not Saturday) against a 98.5 per cent requirement.

Ofcom pushed through the changes to the USO in July 2025 in the belief that the higher pricing for first-class deliveries and the flexibility for second-class letters could help the service restore its profitability and reliability. Instead, it has gone further backwards.

The takeover was cleared last year after the then-business secretary Jonathan Reynolds (now Keir Starmer’s chief whip) insisted that Kretinsky was a ‘legitimate businessman’.

This sign-off came despite connections to Moscow and allegations about the business dealings of Slovakian business associates. 

Little attention was paid by the Government to high interest rate debt financing of the deal, which put an additional £3billion of borrowing on to the company’s balance sheet.

As this paper pointed out, ignoring the baleful events at Thames Water, after it was involved in a highly leveraged takeover, would be disastrous for the Royal Mail. 

In his effort to secure the deal, Kretinsky promised no redundancy for Royal Mail workers and to adhere to pre-agreed pay settlements.

The CWU lifted its previous opposition to the deal and supported the new owners. The union website and social media feeds of postal workers show that the relationship with the new owners has fractured.

At the core is an ongoing labour dispute over modernisation of working practices for parcel deliveries.

This is regarded as the most valuable new line of business if Royal Mail is to invest and become permanently profitable again.

In a recent update to CWU members, union boss Dave Ward noted the ‘urgency of the situation’, adding that it could only be resolved if ‘an agreement supports our members’ ability to deliver the right change’.

The surrender of the board of Royal Mail parent International Distributions Services (IDS) to Kretinsky, with the support of the Labour Government, is proving to be a profound error.

So far there is no indication that the Government is willing to use its ‘golden share’, taken at the time of the deal, to restore the confidence of consumers.