South Africa

Post Office cannot survive without R3.8 billion bailout – Minister

Post Office

The South African Post Office (SAPO) cannot continue its operations without a R3.8 billion bailout, which is yet to be approved by the Cabinet. 

This is feedback from the Minister of Communications Mondli Gungubele, who told Newzroom Afrika that the Post Office would need billions of rands to execute its business rescue plan. 

The business rescue plan by joint business rescue practitioners Anoosh Rooplal and Juanito Damons was approved by the majority of creditors earlier this month. 

It laid out significant cost-cutting measures, particularly a reduction in the size of the Post Office’s branch network to only 600 branches and a reduction of employees to 5,000. 

Cutting its staff complement by around 7,000 would reduce its wage bill by an estimated R1.3 billion. 

The Post Office has run at a loss every year since 2013 and has failed to compete with private couriers. It has since recorded over R19 billion in losses. 

Gungubele said the Post Office cannot continue operating as it is and needs to implement its radical business rescue plan to save the company. 

“We are going on a net loss of R2 billion plus, and we are projecting a R1.7 billion loss next year,” he said. 

Shockingly, Gungubele revealed that the Post Office’s operational costs are around 185% of its entire revenue and are projected to reach as high as 200%. 

Employee costs alone are 150% of the company’s revenue.

“If you listen to what I have said, if it continues, then it means we must close the South African Post Office,” Gungubele said. 

The Post Office has asked for a R3.8 billion bailout to implement its business rescue plan. 

“The R3.8 billion is one of the things that was analysed as going to be necessary to do that turnaround,” Gungubele said. 

“If you want to rescue SAPO, that is the only way it can go forward.”

He said the proposal would be presented to the Cabinet for approval and then sent to the National Treasury to execute.

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