State owned entity losing over R1 billion a year plans to turn a profit

The South African Post Office plans to break even within the next three years, given its current corporate plan, according to the acting CEO, Fathima Gany.

This was said during the Post Office’s presentation to Parliament’s Portfolio Committee on Communications and Digital Technologies on Tuesday.

In the presentation, Gany said that the entity generated a revenue of R1.9 billion in 2024. However, it expects this to grow to over R5 billion by 2029.

The Post Office intends to break even in 2027 and generate its first operating profit of R568,860 the following year. By 2029, the postal service believes its profit will increase to over R1.5 billion.

However, according to the same numbers, the business will generate a roughly R1 billion loss in 2025.

In order to bring about this financial turnaround, the state-owned company says it will diversify its revenue streams and adapt to a changing digital world.

In 2024, the Post Office reported that 45% of revenue was generated from postal services, 17% from financial services, 3% from its digital channel, and 2% from courier and parcel services.

However, by 2029, it aims to decrease postal services to 28% of its revenue share, financial services to 8%, and increase courier & parcel and digital services to 28% and 20%, respectively.

By employing this diversification strategy, Gany said the Post Office will generate R548 million in postal services revenue, R1.4 billion in e-commerce revenue, and R1 billion in digital revenue over four years.

However, this will also increase the entity’s expenses from an estimated R2.9 billion in 2025 to R3.6 billion in 2029.

Other initiatives the Post Office will employ include a capital investment programme to mitigate ongoing legacy operational constraints.

These constraints include outdated and incompatible systems, deteriorating branches, inefficient mail processing, and an outdated logistics fleet. It estimates this will require just over R2.3 billion.

“The focus of the Post Office going forward is really to protect its core assets and offer an integrated service offering so that we can enable it to have economies of scale,” Gany told the committee.

“We are also prioritising partnerships so that we can collaborate with the private sector.”

Scavengers circling the Post Office

Anoosh Rooplal and Juanito Damons, the business rescue practitioners (BRPs) employed to stabilise the Post Office, have emphasised the need for these partnerships.

However, they warn that it will need to fight off companies that seek to exploit it while it recovers and reaches stability.

As of 27 February 2025, Rooplal noted that the Post Office had received 59 unsolicited partnership proposals from companies looking to do business with the state-owned entity.

22 of these concerned digital services, 10 infrastructure-as-a-service, two financial services, and 10 logistics.

“All of these were assessed individually, and none were identified as meaningful and capable of turning the dial,” Rooplal said.

“We found partnerships that were very lopsided and proposals that were looking to exploit the remaining infrastructure and resources of the Post Office.”

Since late 2023, Rooplal and Damons have been tasked with restoring the Post Office to financial stability, which Parliament believes they have successfully done.

At the end of May, Gany announced that the Post Office had achieved a positive net asset value of R1 billion, the difference between the entity’s assets and liabilities.

She noted this is the first time the state-owned entity had achieved this since 2012, thanks to its business rescue practitioners (BRPs) writing off R7.4 billion of its debt.

Gany explained that they had reached a compromise with creditors to repay them 12 cents on the rand.

A member of the committee, Imraan Subrathie, praised the work of those involved in the Post Office’s overhaul.

“It was music to my ears when I heard the acting CEO, Fathima Gany, saying that the business can now pay its creditors in the ordinary course of activities,” he told Newzroom Afrika.

“It’s far from being out of the woods, as we have yet to recapitalise the business in terms of its modernisation — it still has a long road ahead of it.”