Telkom demands R70 million from Postbank

Partially state-owned network operator Telkom is enforcing an arbitration award compelling the Postbank to pay R70 million for breaching a settlement agreement over an Oracle software deal.

City Press reported that Telkom has embarked on legal action against the state bank after it failed to honour its agreement through an arbitration process that wound up on 29 January 2025.

Judge Frans Fabricius adjudicated the process, and the two companies agreed to a settlement, but Postbank failed to make the agreed-upon payment.

The partially state-owned telecoms giant approached the Johannesburg High Court on 4 February.

According to Brittany Leroni, Telkom’s legal representative, the parties agreed on pre-conditions before the deal was finalised in January 2022.

She said Postbank had agreed to pay the R70 million in three tranches. The first payment of R25 million was due on 10 February, followed by another R25 million on 10 March and a final R20 million on 10 April.

The South African Post Office, the state-owned entity under which Postbank previously fell, has had past run-ins with Telkom for failing to pay for services.

Postbank officially separated from the Post Office in September 2023. However, the Post Office still serves a large number of Postbank customers.

In March 2023, Telkom threatened to cut off the services it provided the Post Office over an unpaid bill of R269 million.

Then-Minister of Communications and Digital Technologies, Khumbudzo Ntshavheni, was forced to intervene and ask Telkom not to cut off the ailing postal service.

Without the connectivity services provided by Telkom, the Post Office branches across the country wouldn’t have been able to pay out millions in social grants. Nor would they have been able to renew vehicle licence discs.

A spokesperson for the Post Office said at the time that they had paid their last 12 Telkom bills in full. However, the ailing state-owned company also acknowledged that a historical debt was still owed to Telkom.

“The Post Office is in continuous discussions with Telkom to ensure an amicable solution to this,” it said.

It also explained that the Post Office’s network services relied on Telkom’s service provision.

“The Post Office is putting in place a programme to increase revenue, and the SA Post Office of Tomorrow Strategy has been approved,” it said.

“It has identified a number of revenue-generating initiatives, some of which are currently being implemented. It is however, worth noting that the full impact of the strategy would be realised when its implementation has the required funding.”

Transforming to a fully-fledged commercial bank

The Postbank operated under the South African Post Office for many years, but the government is now transforming it into the country’s first state-owned commercial bank.

The ANC has long aspired to create a state-owned bank, believing that doing so would drive transformation in the financial sector.

President Cyril Ramaphosa signed the Postbank Amendment Bill into law in September 2023, formally separating Postbank from the Post Office and transferring its shareholding to the government.

Postbank has always offered some banking services through the Post Office. However, it was purely a savings subsidiary and could not provide transactional accounts, credit, or other banking services.

Ramaphosa’s signing of the Act enabled Postbank to apply for a new banking licence from the Reserve Bank’s Prudential Authority.

Its primary objective is to offer affordable services to communities not catered to by traditional banking, SMEs, and the public sector.

According to Bank Zero chairman and former FNB CEO Michael Jordaan, Postbank will face an uphill battle in establishing itself as a commercial bank.

He noted that there are already alternatives to the Big Five of Standard Bank, FirstRand, Absa, Nedbank, and Capitec. He expected Postbank to struggle due to the complexities of commercial banking.

He warned that it also had a lack of experience among its executives.

“These skills are not readily available — not just in South Africa but globally,” said Jordaan.

“For example, technology decisions have a profound impact on the bank’s operating cost (which determines customer pricing).”

He also said features and innovations would be critical, adding that poor technology choices could be disastrous and costly to address.

Jordaan noted that banking fees are prohibitive to entry for many South Africans, adding that access is a challenge in deep rural areas, which is something that low-cost banks can fix.

He said Postbank could do well if it focused on areas neglected by other banks rather than trying to compete head-on.