Israel’s postal service is going private

Relinquishing control over the Israeli Postal Company will save the government hundreds of millions of shekels.

 Finance Minister Avigdor Liberman (L) is seen with Communications Minister Yoaz Hendel. The two have agreed upon a format to privatize the Israeli Post Company. (photo credit: COMMUNICATIONS MINISTRY)
Finance Minister Avigdor Liberman (L) is seen with Communications Minister Yoaz Hendel. The two have agreed upon a format to privatize the Israeli Post Company.
(photo credit: COMMUNICATIONS MINISTRY)

The Israel Postal Company is on its way to privatization, according to a statement from Communications Minister Yoaz Hendel. “Today we are embarking on a new path in the postal market in Israel,” he said. “Opening it up to competition, lowering regulation, and bringing historic reform to the mail. The letter market is fading and the parcel market is growing, and in light of this reality we are making a big change today that will bring Israeli citizens a new era of quality, efficient and advanced postal services.

A privatization outline agreed upon by Hendel and Finance Minister Avigdor Liberman seeks to promote an IPO of up to 40% of the postal service’s shares on the Tel Aviv Stock Exchange. The remaining shares are to be sold via IPO, private sale, or a combination of the two.

The decision to promote the privatization of 100% of the State of Israel’s holdings in the Israel Postal Company was made following a series of discussions featuring the Finance Ministry and the Government Companies Authority. Relinquishing control over the Israel Postal Company will save the government hundreds of millions of shekels, as it will no longer need to put money toward the regulation of the Israel Postal Company’s activity.

In 2018, the Communications Ministry set out to sell 20% of the IPC’s shares to the private market. However, the ministry believes that this method is not extreme enough to achieve the goal of efficient and effective reform.

“Ever since I took office I have been warned not to touch the mail. One communications minister after another refrained from touching this hot potato,” said Hendel. “Just as I did [...] when we returned Israel to a path of huge investment in infrastructure, now it is time for the postal services to undergo a change.”

Israel Postal Company branch in Jerusalem 390 (R) (credit: Ronen Zvulun / Reuters)Israel Postal Company branch in Jerusalem 390 (R) (credit: Ronen Zvulun / Reuters)

The privatization of the postal service carries with it a heavy responsibility: while competing courier services are not obligated to offer universal service and availability, the Israel Postal Company is. “If you’re only going to have one private company being Israel’s postal service, then you’re going to have to apply some rules here that ensure that everyone will be getting their mail,” said Prof. Dan Ben-David, an economist at Tel Aviv University, and Head of the Shoresh Institution for Socioeconomic Research.

As such the Communications and Finance Ministries will work to update the regulation on the postal market and the postal service, as part of the amendment to the postal law currently being discussed in the Economics Committee.

The proposed reform includes expanding competition in the field of letter sending, stimulating the transition to digitization, changing the method of price control, reducing regulation and higher fines for violations of license provisions.

“It’s not to say that it can’t be a private enterprise, I’m not saying that it shouldn’t,” said Ben-David. “Because maybe then it’ll run more efficiently.”