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Royal Mail dodges regulatory bullet

Shareholders in the postal carrier breathed a collective sigh of relief on Wednesday after Ofcom decided against price controls
May 25, 2016

Investors in Royal Mail (RMG) were delivered some good news this week, courtesy of Ofcom. Following a year-long review, the postal industry's regulator decided not to reintroduce price controls on the carrier’s wholesale or retail price products in the so-called 'access' market.

IC TIP: Hold at 566p

The relatively benign report, whose publication sparked a 2.5 per cent jump in the company's shares, was commissioned after rival Whistl suspended its door-to-door delivery services in London, Liverpool and Manchester last May. That move effectively left the UK’s dominant postal group as the only provider of end-to-end letter delivery services. As a result, Ofcom decided it needed to review its own regulatory role, amid concerns Royal Mail was operating in a competitive vacuum.

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