By Daniel Hunter
Whistl, the delivery service formerly known as TNT, has suspended all postal services in London, Liverpool and Manchester and is consulting on 2,000 redundancies.
It comes after potential investment partner LDC, a division of Lloyds Banking Group, said it wouldn't fund expansion plans.
LDC said it chose not to invest because of "ongoing changes in UK postal market dynamics and the complexity of the regulatory landscape".
Whistl said: "Following the announcement from LDC that it would not proceed with the proposed investment... to fund further rollout of E2E [end-to-end] we have now commenced an extensive review of the viability and potential for the rollout of an e2e postal delivery service in the UK."
Royal Mail shares rose more than 3% after the news. Royal Mail last year complained that services like Whistl had an unfair advantage, in that they don't have to deliver to the whole of the UK at a single price, like Royal Mail does.