SA Post Office prepares for life after business rescue, but still in ‘high care’

The South African Post Office is seeking a high court order to bring its business rescue process to an end, saying the intervention has stabilised its financial position and improved its operations.

Joint business rescue practitioners Anoosh Rooplal and Juanito Damons launched an application in the high court in Pretoria on June 12 seeking to terminate its business rescue proceedings.

The Post Office said the practitioners had also handed the organisation over to a newly appointed board and a high-care leadership team as a going concern.

The application marks a significant step for the Post Office, which was placed in business rescue in July 2023 after the government intervened to prevent its liquidation.

The court application does not mean the Post Office has already formally exited business rescue. The practitioners are seeking an order to terminate the proceedings after substantially implementing the adopted rescue plan.

Speaking to Business Day TV, acting CEO Fathima Gany said the organisation was preparing for life after business rescue but warned that its exit would not mean the Post Office had immediately returned to normal operations.

“Business rescue has brought some stability because it works within the framework so some of the chaos gets frozen,” Gany said.

She described Sapo’s current position as a “high care” environment, comparing the organisation to a patient leaving intensive care who still requires close monitoring to ensure its recovery is sustained.

“Coming out of business rescue does not assume normalised operations. It does mean that it’s a high-touch environment that’s very much like a patient in a hospital that you would devote your energy to ensure that it stays alive,” she said.

The business rescue process has materially improved its financial position. Its net asset position improved from a deficit of R7.9bn to a positive R840m, while creditor debt was reduced from about R8.7bn to R440m. Revenue for the year ended March 2026 increased to R1.54bn.

However, the Post Office has yet to reach profitability. The organisation recorded a loss of R71m in the latest financial year, although this was a significant improvement on the R514m net loss recorded in the previous financial year.

Gany said the next phase would require the Post Office to rethink what a national postal operator should look like in an environment where traditional letter volumes have declined and digital services have transformed the way people communicate.

“The perception is that we want to create a post office or recreate a post office that we once had which was very glorified,” she said.

“The question should be, what should a national post office look like now? And increasingly I think that the answer would be access.”

Gany said the Post Office’s role should increasingly centre on providing access to logistics, connectivity, financial transactions and government services, particularly in communities where purely commercial operators may not find it economically viable to operate.

“It should be an organisation that allows South African citizens access to logistics connectivity, financial transactions, and government access to services for South Africans who purely commercial economics may not always reach,” she said.

Restructuring of the Post Office has resulted in major cuts to its physical footprint and workforce. A total of 4,342 employees were retrenched, and the branch network was reduced to 657, with 366 branches closed.

Gany said the organisation had now reached a point where further cuts would threaten its ability to operate.

“That’s the tipping point of what the organisation needs. You might as well shut the whole business down if you’re going to cut it any further,” she said.

The focus would therefore shift from simply reducing costs to finding new ways of delivering services while retaining the Post Office’s social mandate.

“Now it’s about stabilising, and it’s about growing it and growing it differently,” Gany said.

She said this could involve moving away from the traditional model of maintaining large, costly branches and exploring more flexible ways of providing last-mile services.

Gany also stressed that the organisation had focused on areas within its control during the business rescue process rather than relying exclusively on government funding.

“What was not within our control was getting an investment or government funding. I set the leadership team a task to say, ‘let’s look at what we can do within our control’,” she said.

The Post Office received R2.4bn in government funding during the business rescue process. A further R3.8bn tranche contemplated in the rescue plan remains outstanding.

The additional funding was intended to support key elements of the rescue plan, including infrastructure upgrades, digitisation, working capital requirements and a further payment to certain creditors. The business rescue practitioners have previously said the absence of the R3.8bn made it impossible to fully implement parts of the rescue plan.

The R3.8bn has been a significant point of contention between the Post Office and the government. In February, parliamentary legal advisers said the funding could not be regarded as a legally binding commitment under the national budget process and the Public Finance Management Act.

Gany said the challenge now was to build an organisation capable of supporting itself while continuing to fulfil its public-service obligations.

“We’re still here to not run to the state all the time and ask for bailouts or funding, but how do you maintain the organisation while still maintaining your social mandate?” she said.

“We remain South Africa’s designated postal operator, which means that we carry a universal services obligation to provide the basic postal services to South Africans irrespective of geography or income,” Gany said.

The newly appointed board have assumed responsibility for the Post Office as the organisation moves into the next phase of its turnaround. A high-care leadership team has been established to manage the transition from business rescue and support operational stability.

The Post Office said the business rescue practitioners handed the organisation over to the board and the leadership team as a going concern in June.

The business rescue practitioners have said the Post Office’s future will require a new turnaround strategy, capital investment and strengthened governance as the organisation seeks to move beyond the immediate stabilisation achieved through business rescue.

The Post Office itself has said the turnaround plan can be reviewed and implemented by the new board once the business rescue proceedings are terminated.

For Gany, the end of business rescue is, therefore, not the end of the turnaround but the beginning of a more difficult phase in which the Post Office must prove that the gains made during the rescue can be sustained and translated into a viable long-term business.