Last chance for the Post Office

The South African Post Office (Sapo) has again approached the Temporary Employment Relief Scheme (TERS) to secure funding to help it pay salaries for bargaining council employees.

According to joint business rescue practitioner (BRP) Anoosh Rooplal, failure to secure funding from TERS could worsen the Post Office’s financial distress, especially considering that the government has yet to honour its commitment to provide Sapo with R3.8 billion in funding.

“The primary requirement is for the government to honour its commitment to provide the investment of R3.8 billion to SAPO,” Rooplal told MyBroadband.

“If the TERS application is not successful and the funding from the government is also not received, this will dramatically increase the financial distress levels of the company.”

If the funding is received, TERS will contribute 75% of the salary bill for bargaining council employees, with the remaining 25% to be paid by Sapo for a period no longer than 18 months.

The TERS fund will decide the period.

He added that the BRPs are still hoping to receive the R3.8 billion from the government, as it committed to provide in 2023. If it doesn’t receive the funds, Rooplal fears that even partially privatising the company won’t help.

“The ‘South African Post Office Strategic Partners Investment task team’ been established by the National Treasury, the Department of Communications and Digital Technologies and Sapo to look further into this,” he said in response to MyBroadband’s questions.

“The funding will mostly be used for infrastructure upgrades. Without these upgrades, we believe that SA Post Office and its assets will be exploited by certain types of partners and partnerships, who may want to capitalise on the misfortunes of the company.”

Regarding the progress of its second TERS application, Rooplal said the fund had acknowledged receipt and is considering it.

While the Post Office hasn’t received the R3.8 billion allocated by the government, Rooplal said it continues to trade with the help of revenue from loyal clients, engagements with key clients, and efforts to collect outstanding debts.

This has helped the state-owned company meet its monthly salary obligations and other statutory payments.

“We are operating on a month-to-month basis until we get certainty about the receipt of the investment funding of R3.8 billion and the outcome of the TERS application,” said Rooplal.

He added that Sapo fulfilled its commitment to make its third and final tranche of retrenchment payments to all former employees.

“If and when we receive the funding, the outstanding commitment of approximately R500m will be paid to certain statutory and payroll creditors,” said Rooplal.

He said the remaining R3.3 billion will be used for working capital requirements and infrastructure upgrades.

This is the second time Sapo has approached TERS to secure funding. Through its first application, it hoped to delay mass staff cuts at the state-owned company.

In April 2024, following discussions with unions, the BRPs filed an application at the Commission for Conciliation, Mediation, & Arbitration (CCMA) to delay the retrenchments.

The BRPs, labour unions, South Africa’s ministers of labour and communications, and the Unemployment Insurance Fund engaged in talks to secure TERS funding to protect jobs at Sapo.

They agreed to withdraw retrenchment notices to some impacted workers with the hopes of securing the funding.

Through the agreement, TERS would help pay employees for 12 months while Sapo’s BRPs and stakeholders worked on a “progressive turnaround plan” that eliminates the need for job cuts.

The CCMA was unconvinced. It noted that TERS was relaunched following the Covid-19 pandemic to help companies avoid retrenchments with a temporary cash injection as long as they could show a reasonable prospect of a sustainable turnaround.

However, in Sapo’s case, it said securing TERS funding would just delay the inevitable.