This week, Minister of Regional Affairs and Agriculture Hendrik Johannes Terras (Eesti 200) signed a decision initiating a special audit of Eesti Post. The aim of the audit is to assess how the company's management bodies — both the management board and supervisory board — have influenced Eesti Post's financial results and overall fiscal health in recent years through their decisions.

According to Martti Kuldma, CEO of Eesti Post, the special audit is within the rights of the state as owner, but to his knowledge, there have been no major violations at the company.

"And if the minister [Terras] wants to use a special audit to understand the business and evaluate the quality of management, then that's his decision. Now, as to how I personally assess the company's operations — I've been involved with the company for four years, and from my perspective, management has continuously improved. If we look at financial performance and market share growth, the decisions that have been made have supported the company," Kuldma said.

When asked what the audit might uncover, Kuldma said that it would likely identify minor — possibly even some larger — oversights.

"Oversights in processes, formalities perhaps. For example, maybe a document is missing somewhere, or some profit calculation or its underlying principles didn't meet expectations, and so on. But to the best of my knowledge, there have been no major violations at the company, nor has there been any intent to deceive. Looking at large companies and state-owned enterprises, I can say with my hand on my heart that Omniva has been managed at a fairly high level," he said.

The special audit is expected to cost half a million euros. According to Kuldma, the funds will come from Eesti Post's budget, which will make it more difficult to meet the profitability targets expected by the owner.

Asked what he thinks Minister Terras is hoping to find through the audit, Kuldma replied that since Terras is newly responsible for the area, it is understandable that he wants to ensure the company under his jurisdiction is well-managed and free of surprises.

Letters could also move to parcel terminals in the future

Twenty-five years ago, more than 50 million mail items passed through the Eesti Post network each year. Today, Estonians send fewer than one million letters annually via the postal network, said Martti Kuldma, noting that the volume of letters dropped by 30 percent in just the past year. At the same time, Eesti Post (that also uses the Omniva trademark — ed.) has decided to develop a network of parcel machines located close to people's homes, and in the future, letters could also be delivered through these machines.

"Of course, we're not forcing this change — it will happen as people's usage habits evolve. I see a future where most letters could also be delivered through parcel machines. You'd get a notification letting you know something's waiting for you and it'd be worth checking," Kuldma said.

He added that changes to the Postal Act would be needed to make this possible, and those amendments have been awaiting submission to the Riigikogu for several years. "The other part of the equation is how quickly we can bring neighborhood parcel machines to the people. Our current investment plan spans five years," Kuldma said.

At the same time, the current principle would remain in effect: if someone lives more than five kilometers from a post office or, in the future, a parcel machine, they will still be guaranteed home mail service, he added. "In the future, it might be possible to 'target' the universal postal service — meaning the state wouldn't necessarily have to guarantee that every letter reaches every mailbox. Instead, a letter might only need to be delivered to a mailbox if it's registered or addressed to someone with special needs," said Kuldma.

Another possible change could be to the frequency of letter deliveries, which might be reduced to two or three times per week. "We've submitted our proposals to the state, but the final decision rests with the owner. Whether we have to deliver five times a week or two, that makes a significant difference in costs — we could be looking at up to a 50 percent savings in service volume for some areas," Kuldma noted.

Profit still the goal

Kuldma has pledged to return Eesti Post to profitability by the end of the year. Both current Minister of Regional Affairs Hendrik Johannes Terras and his predecessor, Piret Hartman (SDE), have stated that the company is slated for privatization.

In Kuldma's view, Eesti Post has been somewhat slow to adapt to market changes and part of the responsibility lies with the state, its owner, for allowing amendments to the Postal Act to stall.

Cost-cutting measures have already been underway for some time.

"We've reduced the number of office staff by 20 percent. We're reviewing the postal and distribution network to ensure it meets today's needs. That means reassessing where mailboxes, post offices and distribution centers are located. For example, we're merging post offices and distribution centers. And while that might seem like it could lower service quality, the reality is quite the opposite. It will actually allow us to offer more services at post offices in the future — why not pick up a refrigerator at your local post office, for example?" Kuldma said.

To grow revenue, the focus is primarily on the international parcel business. Nearly one-third of Eesti Post's turnover already comes from international parcel services.

"So this year, the emphasis is on cutting costs, while over the longer term the focus will shift to increasing revenue. Product development and expansion into new markets — these are long processes that take several years to yield significant results," Kuldma said.

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