The SA Post Office’s debt exceeds it assets by R12.5bn, according to business-rescue practitioners who gave their first update after two months at the helm trying to save the state-owned entity.
Business-rescue practitioners Anoosh Rooplal and Juanito Damons said the success of the business rescue process requires “arresting the cash flow bleed while also allocating capital to facilitate the company being able to service clients effectively”.
Business rescue is a legal process that halts payments to creditors while practitioners try to restructure the company and attempt to save it from liquidation.
The government has committed more than R6.2bn in bailouts to the Post Office in 2023 on top of a cumulative R8bn in previous years, but as state finances come under increasing pressure, there may be resistance to continual bail outs.
The Post Office has run at a loss since 2013.
Rooplal said that since their appointment, “We have been working with management to address the decline in revenue, generate additional sources of revenue, reduce costs, effect key structural changes in the Post Office business model and consider key investment in technology and infrastructure to drive performance.”
Since taking over in late July, the business-rescue team has undertaken an analysis of the branch network and looked at which branches are required and which need to be reopened.
Many are closed due to unpaid rent or have had their electricity cut off for nonpayment. The practitioners said the importance of reopening branches had to be balanced with the costs incurred by the process and the lack of available funds.
The practitioners examined branches using a wide range of criteria including profitability, geographical reach to customers, universal service obligations to keep certain branches open and required services like motor vehicle licensing, financial services and Sassa grant payments by the Post Bank.
It was stated in the update that Post Office employees were being paid and medical aid payments resumed in August so some benefits can be accessed by staff.
But the payment of staff salaries is dependent on cash flows of the entity and funding received from the department of communications and digital technologies and the Treasury.
The practitioners have done a skills analysis of staff and resumed disciplinary processes that had been put on hold.
“All disciplinary hearings including high-profile matters relating to senior management are receiving attention. We hope for these matters to be finalised in the coming weeks.”
There are believed to be about 12,000 employees who work at the Post Office although figures previously offered by the entity vary.
The voluntary business plan update did not detail any ways to increase revenue.
Older Post Office turnaround plans have proposed more digitalisation, partnering with courier companies, e-commerce, providing wi-fi services at branches, selling insurance policies and providing home affairs services
However, the private sector has taken over services previously offered by the Post Office, delivering post, parcels and providing grant payments.
Demand for services is also lower. Many institutions such as banks and retailers no longer send post or mail catalogues but use email or digital advertising.
Payments for electricity, airtime, municipal bills, lotto tickets and money transfers can be made at many stores including Shoprite, Spar, Pick n Pay and Pep. Pep’s Paxi transports more than 4.2-million parcels a year between its extensive network of more than 2,570 stores across SA, which exceeds the number of Post Office branches.
MTN and Vodacom have also expanded into the financial services space and provide ways to make payments, transfer money and buy airtime.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.