July 10, 2017 / 4:11 PM / a year ago

CORRECTED-Dutch firm PostNL's share rise on suggestions of regulatory easing (July 10)

(Corrects spelling of name Kepler analyst in penultimate paragraph)

By Wout Vergauwen

July 10 (Reuters) - Dutch postal firm PostNL’s shares rose more than 4 percent, the biggest riser on the pan-European Stoxx 600 index, on Monday after the outgoing economy minister suggested the country’s mail market needed regulatory changes.

Mail volumes have nearly halved over the past 15 years - more than in any other European country - as rising stamp prices and high internet penetration drives customers to electronic communication.

In a letter to parliament on Monday, caretaker Dutch Economy Minister Henk Kamp suggested revising long-standing practices, including daily mail delivery, tarrifs and cooperation in delivery.

PostNL shares rose as much as 4.3 percent to 4.27 euros ($4.86), outperforming the pan-European stoxx 600. Shares are flat year-to-date after gaining 17 percent over 2016, outperforming the Dutch benchmark AEX index

Kamp’s letter cites a report analyzing the Universele Postdienstverlening (UPD), a public service obligation held by PostNL requiring it to service rural areas which are less profitable due to high delivery costs.

His suggestions, including servicing sparsely populated areas through cooperation and reducing delivery requirements from five to two- to three times per week, would allow PostNL to lower operating costs, KBC analyst Ruben Devos said.

PostNL’s European peers such as Royal Mail and Deutsche Post are also shifting focus away from a deteriorating core business.

Belgian peer Bpost tried to acquire PostNL this year, saying a combined company would be a major European player with cost efficiencies. But the 2.54 billion euro bid fell through after PostNL management said it lacked political support and would hurt profit.

Kepler Cheuvreux analyst Andre Mulder said Kamp was on his way out and reducing mail delivery days would require approval by all EU countries.

Kamp, a member of the liberal VVD of outgoing Prime Minister Mark Rutte, also said in the letter that the decision was not his to make but that of his successor.

$1 = 0.8783 euros Reporting by Wout Vergauwen; editing by Susan Thomas

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