Royal Mail could start delivering second-class mail on alternate days and give up Saturday deliveries entirely under reforms to its universal service obligation set out by Ofcom.

The industry regulator said the way people used postal services had changed and rising costs had threatened Royal Mail’s financial sustainability.

It has set out a package of changes, which it said could save the company between £250m and £425m during 2025/26, with ongoing savings after that.

They include paring back second class mail deliveries, stopping postal deliveries on Saturdays and cutting delivery targets for first-class mail from 93% to 90% and from 98.5% to 95% for second-class mail.

These proposals are now being consulted on until 10 April and Ofcom added that it would publish a statement in the summer.

Ofcom said: “While we consider the proposed reform is necessary for the financial sustainability of the universal service, our analysis suggests that it is not sufficient on its own.

“The long-term financial sustainability of the universal service will also be dependent upon Royal Mail realising the full potential net cost savings of the reforms, achieving significant growth in parcels, effectively managing the decline in letter volumes, and improving its efficiency by adapting its network to the volume and workload changes.”

Royal Mail chief executive Emma Gilthorpe said: “Ofcom has recognised the urgent need for change so that the future of the universal service can be protected for all.

“As Ofcom’s analysis shows, it is no longer financially sustainable to maintain a network built for 20 billion letters when we are now only delivering 6.7 billion. Reform is crucial to support a modern, sustainable, and reliable postal service for our customers, our company and our people.”

The company is set to be taken over by Czech billionaire Daniel Křetínský’s EP Group in a deal expected to be completed by the end of March.