July 29, 2014 / 6:07 PM / in 3 years

UPDATE 1-Italy post office says needs more funds to keep up full service

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ROME, July 29 (Reuters) - Italy’s post office operator Poste Italiane, which the government has slated for privatisation, said on Tuesday it would need more funding to be able to keep up a comprehensive mail delivery service.

A 40 percent stake in the post office was due to be listed this year as part of a government drive to put stakes in several companies on sale and reduce Italy’s sky-high public debt, but the plan has run into delays, casting doubt on whether the government can meet its revenue targets.

Poste Italiane, which like post offices across Europe has been squeezed by competition from private sector operators, said on Tuesday that measures to cut the cost of providing a full service were particularly urgent in light of the stake sale project.

“A comprehensive postal service is not sustainable any more, and a careful review needs to be done of its structure and how to finance it,” Poste Italiane said in a statement.

The post office said providing its full service cost 704 million euros ($944.13 million) in 2012, more than double the 320 million euros Italy’s communications industry regulator estimated should be necessary for the period.

Italy’s Treasury has said it aims to raise around 4-5 billion euros from the listing, to contribute to cutting a public debt expected to touch 135 percent of gross domestic product this year, the highest in the euro zone after Greece.

Poste Italiane’s chairman said earlier this month the privatisation would not take place until after November, effectively delaying any listing until next year.

The government aimed to raise 11 billion euros ($14.75 billion), amounting to around 0.7 percent of GDP, from the entire privatisation project which includes sales of stakes in traffic control operator ENAV, and oil companies Eni and Enel.

Economy minister Pier Carlo Padoan has said that if it is not possible to sell the Poste Italiane stake this year, the government might accelerate the Eni and Enel stake sales. ($1 = 0.7457 Euros) (Reporting by Isla Binnie, editing by William Hardy)

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