Dutch postal company TNT Post is set to become the first private company to compete against state-owned powerhouse Česká pošta in mail delivery in the Czech Republic.

TNT Post announced Oct. 3 that it will begin delivering business letters and other letters weighing more than 50 grams (1.8 ounces) by the end of the year. Česká pošta will still have a government-regulated monopoly on mail lighter than 50 grams.

"Right now, we'll be eyeing mostly corporate clients because business mail services are just developing here," said Martin Kučera, TNT Post's manager for the Czech Republic. TNT does not plan to offer faster services than Česká pošta, but it will be cheaper, he said.

While Česká pošta usually delivers within 48 hours, its prices for business mail run 5 Kč (22 U.S. cents) to 7.50 Kč per letter. TNT Post officials say the company would charge only about 4 Kč per letter, but deliveries will be made within three to four days.

Česká pošta officials have not expressed outright concern about the new competition.

"We don't plan any immediate changes in our pricing policies," said Česká pošta spokesman Ivo Mravinac. "We'll see how the situation develops."

Česká pošta's turnover increased 8.3 percent last year to 17.7 billion Kč, helping the company reach net earnings worth an estimated 667 million Kč.

TNT Post, which previously focused on distribution of commercial leaflets and express delivery of packages within the Czech Republic, will also offer printing services for commercial letters and leaflets, and will operate its own call center.

Right now, Kučera said, the Dutch company will send more than 10,000 mail carriers in black-and-orange outfits out into the street. Česká pošta currently has nearly 13,000 mail carriers.

Česká pošta also only delivers during the daytime. TNT plans to deliver until 8 p.m. on workdays.

Fast liberalization

The ongoing liberalization of postal services forced by European Union requirements enabled TNT Post's penetration of the country's mail delivery services.

Česká pošta once held a monopoly on letter and package delivery up to 100 grams. In return, Česká pošta had to guarantee deliveries at prices less than 18 Kč to all locations throughout the country. It also had to secure pension payments and collect TV and radio fees.

In January, the monopoly was reduced to handling mail less than 50 grams.

But even this reduced monopoly may not last for long. New investors entering the postal market in the near future, coupled with Česká pošta's planned privatization, threaten to weaken the dominance of the state-controlled company.

Interior Minister Ivan Langer announced in early September that the government was ready to start preparing to privatize Česká pošta.

"I'd be glad if the privatization was completed by Jan. 1, 2008," Langer said. He added, however, that it will be difficult for the current government to privatize it since Prime Minister Mirek Topolánek's Cabinet failed to win a vote of confidence in Parliament Oct. 3.

Česká pošta must first be transformed from a fully state-owned company into a publicly traded company. Only then can the government consider whether to sell the company on the stock exchange or to a strategic investor.

Langer said the entire transformation should not take longer than one year.

After it becomes a publicly traded company, the government will also need to decide whether to privatize the postal operator as a whole or in parts, said former Information Technology Minister Dana Bérová, whose recently dissolved ministry once controlled Česká pošta.

Investors will be interested in taking over mail delivery in big towns, she said, but there could be little interest in more remote locations.

Bérová insisted the privatization not be delayed, since its position and monopolies on the fast-liberalizing postal market could not be held.