“SAPO bailout is like feeding a dead horse”

Business News

Tebogo Msimanga |

The Democratic Alliance (DA) says the turnaround strategy of the South African Post Office to reposition the entity into the “Post Office of Tomorrow” is a hopeless pathway to nowhere.

DA Shadow Minister of Telecommunications and Digital Services Solly Malatsi said this ambitious document is centred around the lofty goal of moving the Post Office towards a “modernisation and digital transformation strategy to replace legacy systems with modern technologies.”

Malatsi further said all of this is solely dependent on the application for a National Treasury bailout of R8 billion that the Post Office needs to settle its debts and upgrade its technological infrastructure to compete in the postal and courier services market.

“It is astounding that an entire turnaround strategy for a collapsing institution could base its entire survival on a bailout when the Post Office has been operating at a loss since 2013. The Post Office has been a serial dependent on bailouts for far too long without improvements in its declining operations”.

The crux of the turnaround strategy is a series of cost-cutting measures across the board without a solid plan for profit sustainability.

“Some of these cost cutting measure including introducing “Voluntary Severance Package” that will result in reducing the staff from 15600 to 9000 over two years at a cost of R420 million and reducing spending on security and bank charges by R1.5 billion in 2022/24.”

Yet that will not be enough to make it profitable given that its liabilities stand at R6.7 billion, including a R2.4 billion it owes the Post Bank.

The DA believes that yet another bailout without changing the ownership structure of the Post Office is like feeding a dead horse.

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