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Brazil's government publishes decree about its postal service privatization

The government expects to hold the postal auction next year. The modeling of the company's sale is expected to be completed in August

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  • The decree includes the sale of the company’s shareholding control and the concession of postal services for sending letters, printed matter, parcels, and telegrams;
  • Although the government previously said that it did not intend to divide the state-owned company’s privatization, in practice, the operations’ concessions may end up in the hands of different companies.

This Wednesday, Brazil‘s federal government published a decree that includes Correios, the country’s postal service, in the National Privatization Program, establishing BNDES as responsible for executing and monitoring the process.

The decree describes the possibility of selling the company’s shareholding control and the concession of postal services for sending letters, printed matter, parcels, and telegrams. Although the government previously said that it did not intend to divide the state-owned company’s privatization, in practice, the operations’ concessions may end up in the hands of different companies.

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According to the text, privatization is subject to “approval by the National Congress of the legal framework for postal services”, which was sent to the House in February.

The government expects to hold the postal auction next year. The modeling of the company’s sale is expected to be completed in August after the first phase of the privatization studies been completed in mid-March.

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The Investment Partnership Program (PPI, in the acronym in Portuguese) points out that Correios invested BRL 300 million in 2020 and that the investment need for this year would be BRL 1.7 billion. For 2025, the value goes to BRL 2.6 billion. The company’s market share in recent years, according to the PPI survey, fell from 48% in 2017 to 43% in 2019.

The earnings before interest, taxes, depreciation, and amortization (Ebitda) of Correios in 2020 amounted to BRL 988 million, up 46% over 2019. The margin grew from 3.7% to 5.7%. Net revenue, however, decreased 6% in the period, to BRL 17.7 billion.

Not only global logistics giants are eyeing the Brazilian state-owned company, but also the largest retailers in Latin America.

(Translated by LABS)

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