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German government eyes larger hike in postal charges; Post shares rally

Stock MarketsFeb 11, 2019 04:20AM ET
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© Reuters. A postman of German mail services Deutsche Post AG delivers mail in Hanau

DUESSELDORF, Germany (Reuters) - The German government could order a larger increase in the cost of sending a letter than earlier planned, the Frankfurter Allgemeine Zeitung reported, sending shares in Deutsche Post (DE:DPWGn) 2.6 percent higher on Monday.

Citing sources, the newspaper said that postage on a letter could be increased to 85 or 90 cents from this summer under legislative changes that the Economy Ministry is expected to initiate this week.

The hike would be larger, but come later, than a hike of up to 4.8 percent in the standard letter rate of 70 cents (79 U.S. cents) that had originally been penciled in for April and would have remained in force until the end of 2021.

No comment was immediately available from the Economy Ministry, but the Federal Network Regulator that oversees the postal market confirmed that the government was working on a new postal directive.

The regulator was aware of the government's deliberations, and was examining whether to make short-term changes in its ongoing deliberations on adjusting postal charges, a spokesman said.

Deutsche Post, which delivers 59 million letters a day in Germany and has a market share of 62 percent, welcomed the government's deliberations but declined to comment on how much postage costs would go up.

The company, which is partly state-owned, has enjoyed a boom in volumes thanks to the rapid growth in parcel shipments by online retailers such as Amazon.com (NASDAQ:AMZN) and Zalando but price increases have not kept pace with its costs.

German government eyes larger hike in postal charges; Post shares rally
 

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