Royal Mail blow as BT and British gas switch to rival

Royal Mail is reeling from a major double blow today after it emerged two of its biggest customers, BT and British Gas, have dumped it in favour of Dutch group TNT.

The pair - the UK's biggest telecoms and household energy-supply firms - have both ditched Royal Mail from delivering its bills and statements, the Standard has learned.

TNT Post's contract wins make it a major potential rival to Royal Mail and may hasten the day when the Dutch-owned group puts its own orange-liveried battalion of postmen and women on Britain's streets.

The loss of the £150 million BT and British Gas contracts is the Royal Mail's biggest since the opening up of the UK postal market to competition three years ago. It follows last week's similar decision by the Department for Work and Pensions.

Royal Mail is losing many of its major contracts both on cost per letter and speed and efficiency of delivery.

TNT has already won contracts with HBOS, Lloyds TSB, Barclaycard, Sky, Sainsbury's, npower, Thames Water and T-Mobile. As well as the Work and Pensions Department, UK Mail - an arm of Business Post - has picked off Royal Bank of Scotland, Capital One, Vodafone, O2, Orange and Powergen.

DHL, owned by Deutsche Post, has the Tesco, John Lewis and Debenham contracts. TNT Post UK chief executive Nick Wells said: "TNT Post is the main challenger to Royal Mail. We have the right products at the right price."

Wells confirmed: "It is our stated ambition to get orange postmen on the street at some time in the future."

TNT Post will handle around 340 million of BT's and British Gas's letters to their 40 million account customers - delivering pre-sorted bills and statements within a guaranteed two days.

Royal Mail will be paid to do the final-mile delivery, but that may change. Commenting on the losses, a spokesman for Royal Mail admitted that "competition is clearly intensifying", but insisted: "Royal Mail will fight for every last letter."