Post Office ‘In ICU’ But Hoping To Get A Share Of The Spectrum Windfall… The SA Post Office (Sapo) is banking on getting an allocation from the government’s sale of radio frequency spectrum to ease its financial woes.
Sapo deputy chair Sipho Majombozi described the entity as “being in ICU” and in need of government funding.
“We are still in the doldrums and therefore the analogy of iskorokoro still holds; of being in the ICU and requesting the intervention of funding and resourcing,” said Majombozi on Tuesday.
A senior official in the department of communications and digital technologies indicated to parliament’s portfolio committee on communications that the National Treasury was amenable to the request for funding.
“I must say upfront that there is indeed a sense of goodwill at Treasury for funding the post office,” said deputy director-general Omega Shelembe.
We are still in the doldrums and therefore the analogy of iskorokoro still holds; of being in the ICU and requesting the intervention of funding and resourcing
Sipho Majombozi, Sapo deputy chairperson
Shelembe said the goodwill emanated from the fact that the department of communications, through the Independent Communications Authority of SA (Icasa), managed to get the spectrum proceeds to the national fiscus.
Icasa raised R14.4bn from the sale of the radio frequency spectrum in March and the money went to the national purse.
“The Treasury is considering whether the best or most elegant way to go is a special appropriations bill, or we go the adjusted budget route,” he said.
These will take the same amount of time, and it was most likely the Treasury would wait for the adjustment budget, he said.
Shelembe said they had also tried to pursue the Treasury to pay in an upfront lump sum, the Universal Services Obligation, a subsidy to Sapo that is normally payable in tranches throughout the year.
“This would be used to deal with the immediate funding requirements while we are still negotiating for funding of the post office that will come from the Treasury,” he said.
It, however, remains unclear how much Sapo needs from the government.
At Tuesday’s meeting, while Sapo bosses and communication department officials repeated the need for funding for the entity, no-one mentioned how much was needed.
In November, deputy minister Philly Mapulane said they needed an R8bn bailout from the state if it was to survive.
Four months later, in a closed parliamentary meeting in March, the entity said its immediate cash flow requirements totalled R6.9bn. An extra R2.4bn would be required to settle Postbank liabilities.
But days later, responding to MPs’ questions in the National Assembly, minister Khumbudzo Ntshavheni said they needed R1.6bn over two years and that was what the minister of finance was considering.
On Tuesday, Sapo CEO Nomkhita Mona said they need the wherewithal to start. “We need two things — we need time and some funding,” she said. “And when we say some funding, we are actually looking for funding so that we can service … so we can be able to catch up on where we are now.
“The main thing we are looking for funding for, is to implement this new exciting Post Office of Tomorrow strategy and we believe that if we are able to do all the initiatives we put on there, we will never have to come back to government to look for funding again,” said Mona.
She warned that Sapo having been on a downward spiral for more than seven years, was not going to turn around immediately. But she was confident in the latest turnaround strategy would work.
The acting director-general of communications Nonkqubela Jordan-Dyani was bold enough to put a time frame to when the change will come.
“We have come up with an option and a solution that is going to look at the rescue and the business basically coming out of that within 18 months,” she said. “That is from the beginning of this financial year (April 2022) and we would like to beg the indulgence of the portfolio committee to work with us on this journey.”
She said while one of the interventions they are implementing is cutting down on operational expenses, retrenchments were not an option due to the current economic climate.
Sapo suffered losses in the year under review (2020/21), only managing revenue of R2.9bn for the year ending March 31 2021, a decline of R1.2bn compared to the R4.1bn they made in 2020.
Postal services (R1.6bn) were the main reason for the revenue decline, down from R2.8bn in the year that ended in March 2020.
The company’s loss for the year increased by R469m to R2.3bn.
At R1.4bn, the financial services revenue increased by R135m (11%). It was R1.2bn in the preceding financial year and Sapo’s operating costs of R6.2bn reduced by R370m (6%) in comparison with the R6.5bn the previous year.
Staff costs reduced by R180m (5%) to R3.7bn. These contribute 61% of operating costs.