Royal Mail, operator of Britain's state-owned mail service and European parcels network GLS, has unveiled an investment plan designed to strengthen the group's finances and improve competitiveness.

Management hopes that the five-year programme, agreed by the UK Government, will re-position Royal Mail to compete more effectively with commercial rivals and address major funding challenges for the company.

Highlights of the programme include government agreement for a £1.2bn debt facility, on commercial terms, to modernise Royal Mail operations.

It also includes an inaugural "phantom" share scheme to reward Royal Mail's 190,000 employees, worth up to £5,300 per employee over five years – equivalent to a £1bn dividend distribution.

Allan Leighton, Royal Mail Chairman, said: "Continuing to transform our operations isn't optional. We will do so while also rewarding our people for their efforts and allowing them to share in our continued transformation."