Post Office needs R3.8 billion, faces liquidation

The South African Post Office (Sapo) business rescue practitioners say the state-owned mail carrier will need another R3.8 billion to fully implement their business rescue plan.

They warned that unless the Post Office urgently receives a cash injection, its reserves will run out in October 2024 and may need to be liquidated.

The business rescue practitioners gave the warning in a presentation to the Portfolio Committee on Communications on Tuesday, 3 September 2024.

Sapo was placed into business rescue in July 2023, and business rescue practitioners Anoosh Rooplal and Juanito Damons were appointed to formulate a plan, which was adopted in December of that year.

As part of being placed into business rescue, Sapo received a R2.4 billion injection from National Treasury, which it used to cover operations, settle debts, and pay salaries and severance packages.

The Post Office has applied for additional funding from Treasury to see out its business rescue plan.

The plan has so far resulted in 4,875 people being retrenched out of the 11,083 staff that were employed at the ailing entity.

Two of the three retrenchment package payouts have already been made, with the third scheduled for November this year.

Of its 1,023 branches, with only 113 being profitable, it was decided that 366 should be closed. This left 657 branches nationwide, of which 232 offer motor vehicle licence renewals.

Rooplal and Damons made this decision while keeping the Post Office’s universal service obligation mandate in mind, and not treating the entity as a purely commercial enterprise.

“An important reminder is that the reason and efforts made to restructure this business are based on the fact that the Post Office has a social mandate that requires it to serve all South Africans,” Rooplal said.

“While city dwellers have the means to pay for and access communication networks, South Africans living in rural areas have fewer choices.”

He said that although urban hubs won’t be excluded from the restructuring, an emphasis will be placed on providing Wi-Fi, printing, scanning, and training to local townships and rural areas.

Sapo’s debt to secured creditors was reduced by 88% to R842 million. By the end of July, it had paid 98.6% of this.

Statutory and payroll creditors will be paid an additional 18 cents per rand dividends when Sapo receives the additional R3.8 billion from the Treasury.

Rooplal and Damons also reduced the state entity’s liabilities from R8.7 billion upon entering business rescue to R440 million by the end of June this year through deep compromises.

Part of the business rescue plan included moving key system applications and hardware to a new data centre, stabilising connectivity.

Additionally, business operations have been overhauled to ensure cost-effective mail handling in large centres and a multi-modal approach using bicycles, motorcycles, vans and 422 leased vehicles to ensure the delivery of mail and parcels.

All African mail backlogs were cleared after establishing an internal committee to comply with international postal obligations.

Rooplal and Damons are considering private partnerships for the Post Office, in line with the Government of National Unity’s intentions.

A committee has also been established for this purpose. So far, it has brought about one partnership with Ethiopian Airlines.

The Post Office is also working on several public partnerships with state bodies to enhance service delivery.