Australia Post is dumping its controversial PostConnect print and marketing business after two pointless years, selling it off to global card and transactional mail company ABnote.
Shedding PostConnect takes the monopoly mail carrier completely out of competition with printers who have long resented its entry in the market as a direct competitor to their business.
The deal includes all PostConnect mailhouses and printing equipment, including multiple Oce Colour Stream 3700 high-speed inkjet printers, with operations in five states.
PostConnect was set up in 2012 from Australia Post’s eLetter and First Direct Solutions to offer data, insight and multi-channel communication services for business customers.
Buying out the multi-channel communications business makes ABnote the biggest secure transactional mail printer in Australia and its third largest mail operation overall.
Adding Post’s huge operation brings ABnote into serious competition with the likes of Computershare, Fuji Xerox Document Management Solutions, and Sema.
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There are no immediate plans to consolidate mailhouses with ABnote’s existing sites, however an Australia Post spokeswoman says ‘where the business is co-located with an Australia Post facility, ABnote will look to transition its operations over time’.
While widespread layoffs are not expected, it is understood not all PostConnect employees will be retained. The spokeswoman says it is working with staff to ‘determine their preferences’ on whether they go to ABnote, are redeployed at Australia Post, or seek other employment.
ABnote Australasia chief executive Nicholas Ficinus says the acquisition includes ‘significant proprietary IP and know-how’ which will strengthen communication channels for it clients.
He says it “allows for our clients to engage and connect effectively with their own customers, through integrated marketing solutions. The simple idea is to deliver smarter ways in order to connect with customers and assist in business growth.”
It follows the company’s takeover of mailhouse and fulfilment services company Mailcare Systems last February.
Australia Post was clearly desperate to offload the loss-making PostConnect business as it was in the process of losing $328m on letters last year, and indeed was rumoured to be shopping it around for at least the past nine months.
Selling off the subsidiary is essentially Post belatedly realising its mistake in ever getting into printing in the first place, as transactional mail volumes have been in freefall since the GFC in 2008 coincided with a widespread shift towards people getting their bills and secure communication online.
Integrated Mailing Services managing director Buzz Borsitzky said last week that FXDMS in particular is taking huge volume hits that have seen it shed significant staff in recent years.
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An Australia Post spokeswoman says PostConnect was sold off so the mail carrier could focus on its ‘core business areas’.
“As we look to position our business for the future it’s critical that we drive greater efficiencies across all our operations so that we can continue to invest in growing our products and service to meet the changing needs of our customers,” she says.
FXDMS managing director Nick Debenham says he did not really see PostConnect or ABnote as direct competitors and so is ambivalent to the sale.
"We do not compete with ABnote a great deal, whether this changes with their purchase of PostConnect, remains to be seen," he says.
"Overall we see the transaction print market as a challenging one, with declining print volumes and increasing e-channels representing the need for supplier organisation to adapt and deliver more value in both inbound and outbound multi-channel customer communications."
Sema managing director John Stewart congratulated ABnote on its acquisition and while he had no comment on Australia Post getting out of print he says he ‘would like if it had more to offer than just raising mail prices’.
PIAA chief executive Bill Healey, who along with other leading industry figures has long been campaigning against PostConnect’s existence, welcomed the decision to sell it off.
“It was inappropriate for a government owned monopoly to be running this type of business, and we were concerned about its recent expansion and raised competitive neutrality issues with the ACCC,” he says.
Computershare did not provide comment before deadline.
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