Post Office days away from total shutdown WRITTEN BY Daniel Puchert

The South African Post Office (Sapo) may cease functioning by the end of the month because it has not received the R3.8 billion bailout necessary to complete its business rescue plan.

This is according to the Communications Workers Union’s (CWU) national bargaining coordinator, Nathan Bowers, who told the SABC that this concern stems from information provided by the business rescue practitioners (BRP) responsible for Sapo’s stabilisation.

“A few days ago, the business rescue practitioners told us that the R3.8 billion is not forthcoming and that the operations and the workers’ salaries are being placed in jeopardy,” Bowers said.

“In the meantime, while there is dithering here and dithering there, the Sapo workers and their families are being placed into a state of panic.”

MyBroadband contacted the BRPs and communications minister Solly Malatsi for comment but did not receive feedback by the time of publication.

Bowers said the CWU is calling for a meeting with government to explain why “it is undermining a court situation”, as the Post Office would have been liquidated by this point if the state had not planned on injecting the R3.8 billion.

In the same interview, independent analyst Kayha Sithole noted the difficulty of a possible turnaround due to the state entity’s outdated mandate.

“The classic iteration of the service mandate of Sapo is to connect as many people as possible,” Sithole said.

“The problem with this mandate is that it never kept up with the times. You then saw that the way people communicate and exchange information evolved much faster than the Sapo could keep up with.”

Sithole referenced the South Africa Post Office Amendment Bill, assented to by Cyril Ramaphosa two months ago, which aims to expand and diversify the services and mandate of Sapo.

However, Sithole believes this is decades too late.

No more bailouts

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.

In early September, Sapo reported that 4,875 people had been retrenched out of the 11,083 total staff.

Of its 1,023 branches, only 113 were profitable, so 366 were closed. This left 657 branches nationwide.

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.

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.

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

Damons and Rooplal previously warned that the Post Office would reach day zero on 30 October 2024 should it not receive the R3.8 billion.

Sapo’s day zero was the same day finance minister Enoch Gondongwana delivered his medium-term budget policy statement — where he vowed that the Post Office would not receive further bailouts.

“By the way, they told us D-day for the post office is today. But there’s no money in the adjustment as we speak,” Godongwana said in a press conference following the speech.

“We are hoping that the Department of Communications and Digital Technologies (DCDT) will find ways of reorganising and reprioritising their budget to deal with that question.”

However, Communications Minister Solly Malatsi said his department’s budget does not have the resources available to rescue the Post Office.

To solve this issue, the DCDT is considering partly privatising Sapo to modernise its operations and increase its competitiveness.

Malatsi says the department has asked the National Treasury for support in forming a task team to “pursue private financial and operational partners” for the Post Office.

“This will enable serious consideration of privatisation scenarios as a preferential option to further funding from the fiscus,” he said.

“It is with the goal of an innovative and competitive Post Office that it would be strategic to look into its current exclusive license on reserved postal services.”

SOURCE:Post Office days away from total shutdown – MyBroadband