The Post Office is in talks to offload its telecoms arm and is exploring a sale of its insurance business as its new chief executive puts his stamp on the centuries-old institution.
Sky News has learnt that the government-owned company has appointed bankers to oversee and auction of its telecoms division, which boasts 500,000 customers and annual revenues of approximately £150m.
City sources said on Friday that PJT Partners, the investment bank, had been hired to run the auction, which is expected to command a price tag of more than £100m, following a number of unsolicited expressions of interest.
They added that a sale would not proceed unless a satisfactory price was obtained.
Another City firm, Fenchurch Advisory Partners, has separately been appointed to conduct a strategic review of the Post Office’s insurance division.
The insurance business is a regulated intermediary that has roughly 300,000 customers spread predominantly across travel, home, motor and protection products.
The prospective disposals of the two operations follow a comprehensive review of the company led by Nick Read, who joined the Post Office as its chief executive last year.
Economy remains 11.7% below pre-pandemic peak
Economy remains 11.7% below pre-pandemic peak
Mr Read’s appointment came amid an escalating row over the multi-million pound scandal which resulted in a number of its sub-postmasters – or branch managers – wrongly sent to prison.
The crisis led the Post Office to agree last December to pay nearly £58m to settle a legal claim brought by a group of 550 sub-postmasters.
At the time, the network, which has around 11,500 branches across Britain, apologised, with Mr Read’s predecessor, Paula Vennells, the target of particularly fierce criticism over her handling of the issue.
In May, the Post Office launched a scheme to provide redress to current and former postmasters who were not part of the litigation settlement but who believe they were adversely affected by earlier versions of the Horizon computer system.
The company has now committed to appointing one of its army of postmasters to its board for the first time – a decision which has been approved by UK Government Investments (UKGI), the agency which oversees the taxpayer’s interest in it.
Image: The Post Office is separate to Royal Mail but their pair have a close working relationship
One source said that move was “an olive branch” from Mr Read as he tries to repair relations with the Post Office’s stakeholders.
Those relations were strained by a scandal involving the use of a faulty IT system called Horizon, which led to some branch managers being wrongly accused of theft, fraud and false accounting.
Mr Read, who previously ran the Nisa convenience store group, joined the Post Office nearly a year ago.
His decision to explore a sale of the telecoms and insurance divisions will enable the company to focus on handling mail and parcels, as well as providing cash and banking services, according to an insider.
The Post Office is an entirely separate company from Royal Mail Group, which was privatised in 2013 and floated on the London Stock Exchange.
The two businesses have a close commercial relationship, however, with negotiating a new ten-year agreement between them among Mr Read’s priorities.
As with other physical retailers, the coronavirus pandemic has provided a stiff test for the Post Office’s management.
Where jobs have been lost in UK economy
Where jobs have been lost in UK economy
More than 90% of its branches remained open during the crisis, and the network made a number of guaranteed hardship payments to postmasters during April and May.
The Post Office also repurposed part of its foreign exchange cash delivery business to enable the overnight delivery of sterling cash to meet demand.
The chief executive’s other main focuses over the next year will include the delivery of a renewed partnership with Britain’s major banks and building societies, while travel and bill payment services are also expected to receive substantial investment.
A Post Office spokesman declined to comment on Friday.