Post Office in deep trouble — closing branches and selling buildings

The South African Post Office (Sapo) is in deep financial trouble, with landlords kicking branches out of premises, branches shutting down, and the postal agency putting fourteen of its properties up for auction.

With municipal and landlord debt around R305 million, the minimum proceeds from the auctions — R23.2 million — would cover only 8% of what it owes.

A Post Office spokesperson has told MyBroadband that it is adjusting its branch network and that no Sapo-owned premises with customer post boxes are up for sale.

“The SA Post Office is using its network strategy to rationalise its branch network, and no Post Office owned outlets with post boxes are being sold or for sale,” they said.

The spokesperson said forced closures would see post boxes moved to the nearest Sapo-owned premises.

“In the event of forced closures, for instance where a lease contract is not renewed, post boxes are moved to the nearest Post Office owned premises, and the renters are notified by SMS,” they said.

“Customers are invited to send an email to [email protected] or enquire from the Post Office contact centre at 0860 111 502 if they require more information.”

Most of the properties put up for auction in late February are in Gauteng, while there are several in the Free State and one in the Northern Cape.

One property, located at 276 Wessels Street in the Free State, had the lowest reserve price and has since been removed from the auctioneer’s platform.

The most expensive, also located in the Free State, had a reserve price of R8 million. It, too, has been removed from the platform.

Sapo had decided to sell these properties as there was not enough demand for post boxes in these communities.

“Where they might have had thousands of post boxes rented out in the past, now only 30 or 40 are being used,” the auctioneer told MyBroadband.

It also explained that, while Sapo has set reserve prices, it can still decline offers it deems too low.

The auctioneers said they must first send the offers to the Post Office for final approval after the auctions close.

According to the auctioneers, they have a three-year contract with the Post Office.

Post Office in dire straits

Sapo’s annual report for the year ended 31 March 2020 revealed it had incurred losses of R1.8 billion.

At the same time, its current liabilities exceeded its assets by R1.5 billion.

Communications minister Khumbudzo Ntshavheni responded to parliamentary questions surrounding the Post Office’s financial situation, saying that “…the Post Office does not have the required funds to settle its liabilities.”

As a result, Sapo has also fallen into arrears of R485 million with its suppliers.

Telkom has threatened to cut off the Post Office’s Internet access over a R269-million unpaid bill.

Sapo reportedly asked the government for a R9.3-billion bailout in a closed parliamentary session earlier this month.

The Democratic Alliance’s spokesperson for communications, Solly Malatsi, slammed the Post Office for the impact this lack of payment has on South African businesses.

“The devastation the Post Office causes to businesses, many of which are small medium and micro enterprises, with its failure to pay suppliers is destroying the livelihoods of many South Africans,” he said.

Ntshavheni explained that Sapo’s supplier debt, and its debt to municipalities and landlords, results from the entity’s “constrained cash flow position”, adding that its costs outweigh its revenue.

She explained that the closure of Sapo branches due to the debt would negatively affect its customers, and that it would further impact Sapo’s revenue as they will not generate income.

The Post Office’s spokesperson told MyBroadband that it was developing a strategy to offer alternative points of access to customers.

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Post Office in deep trouble — closing branches and selling buildings