Universal postal service refers to the delivery of letters and small parcels and demand for it has been steadily declining, falling by half over the past three years, for example.

A total of 2.8 million letters and small parcels are sent annually and last year this activity operated at a loss of €2.1 million. As the service is unprofitable for Omniva, it leaves insufficient funds for other investments.

"The key question today is whether the state needs to own a company to ensure this service or whether regulation alone would suffice. In reality, the company competes in the parcel market and it is very difficult for it to invest flexibly and take risks in order to remain competitive," said Sigird Soomlais, deputy secretary general at the Ministry of Regional Affairs and Agriculture.

Postal service provision is a legal obligation of the state and the state will continue to organize it in the future. To this end, a public procurement will be held through which a postal operator can obtain a five-year operating license. Omniva's current license is valid until 2029. The question is how to attract private companies to participate in the tender if the service is not profitable.

According to Soomlais, the state is prepared to subsidize the postal service.

"If the market does not function for some reason, the state always has the option to intervene through state aid. Looking ahead, our goal is to make the service more competitive, meaning that, based on market logic, both letters and parcels should reach all parts of Estonia, including rural areas," Soomlais said.

Amendments to the Postal Act are currently under consideration in the Riigikogu, aiming to make the service and its financing more flexible.

"One of the major changes is that parcel machines would also be allowed for sending letters and all such changes are intended to make the universal postal service more attractive to other service providers," Soomlais explained.

Home delivery of periodicals is an additional obligation attached to the postal service, which is partially supported from the state budget.

Postimees Grupp, which publishes a national daily as well as six regional newspapers, remains concerned — not only about potential price increases.

"I would say the risk of price increases is very real, but there are also other components of the service. For example, morning delivery, the number of delivery days and delivery to mailboxes — these are all major questions. We don't know today what will happen. There are more than 200,000 newspaper readers and this is a very important source of information for many people," said Silver Soomre, chairman of the management board of Postimees Grupp.

According to Mihhail Kõlvart, leader of the opposition Center Party, the decision to privatize Omniva shows that the state is not interested in providing basic services to residents and that rural areas will be particularly affected.

"There are at least two major problems here. First, the management of state-owned enterprises, which the state is failing at and does not acknowledge its mistakes. Second, a regional policy issue — if this continues, people will have no reason to live in rural areas," Kõlvart said.

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