SA Post Office owes R304m in rentals and utilities: communications minister

The SA Post Office (Sapo) is in arrears on rentals, utilities and operational costs with R304m owed due to the troubled state-owned entity’s constrained cash flow. This is as of the end of January 2022.

The information was revealed by communications and digital technologies minister Khumbudzo Ntshavheni in reply to a written parliamentary question by FF Plus MP Wouter Wessels.

According to Ntshavheni, Sapo's costs continue to exceed revenue. Sapo does not have the money to settle its debts. This has led to some landlords locking out Sapo from their properties, leading to loss of revenue in the closed branches.

“Sapo does not have funds to settle the liabilities. Sapo developed a revised strategy to improve its operational and financial performance and is implementing it,” said Ntshavheni, adding that the company has requested government intervention through the medium-term expenditure framework process.

The revelation of Sapo’s financial woes comes in the wake of former CEO Mark Barnes' offer to buy a controlling stake in the company.

Barnes laid out his plan to save Sapo from collapse in a column published in Business Day earlier this month, saying he had presented the proposal to government in September 2021 and never got a response.

In the column, he shared a letter he had written to Ntshavheni calling for a public-private partnership to save the ailing Sapo, a “strategic asset of national importance”.

“I believe I still have the support of all principal stakeholders in the post office, including the employees and unions (despite detractors, as there may still be within the department) and I believe that with an appropriate structure and the right leadership the post office can provide the prospect of economic dignity to its people directly and be a bridge between government and the population to address poverty, unemployment and inequality like no other organisation is positioned to do.”

His eight-point proposal was:

• I, Mark Barnes, will lead a consortium that will offer to purchase at least 60%, but no more than 75%, of Sapo;
• 10% of the issued shares in the post office will be allocated directly to employees (current and future);
• the purchase price will be the net asset value of the post office less the value of forecast losses as determined by the auditor-general;
• the consortium, over and above the purchase consideration, will inject a capital sum equal to the determined value of agreed future losses to be funded in the form of low-yielding (CPI, say) redeemable, convertible debentures which will either be repaid or converted into further equity in the post office coincident with the planned listing and further permanent capital raising in the post office in three years’ time;
• certain extraordinary entrenched rights required for the post office to operate as an organ of state will remain intact and attach to the government shareholding for so long as government retains 25%-40% of the post office;
• Postbank will remain an integral part of Sapo in whichever structure is considered most appropriate and the National Treasury will continue to guarantee Postbank deposits until such time (if at all) as Postbank is able to successfully apply for a banking licence regulated by the Prudential Authority within the SA Reserve Bank. This will only be pursued if Postbank wants to provide loans, which is not the initial intention;
• Mark Barnes will be appointed group CEO on commercial terms to be agreed for a term of three years, during which time he will undertake to build a capable executive team to take over. He will be available for a further period of two years to serve as non-executive chairperson if required; and
• a new Sapo board will be appointed after consultation between the shareholders and government will have the right to appoint the initial chairperson.

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