Sluggish recovery for SA Post Office

The state-owned entity today briefed Parliament on the implementation of a turnaround strategy.

Parliament's telecommunications and postal services committee meets new post office board for the first time. Picture: Rahima Essop/EWN.

CAPE TOWN - Officials from the SA Post Office have told MPs the state-owned entity's "financial recovery remains slow" because it's not bringing in enough revenue to cover costs.

The new board is appearing before the portfolio committee on telecommunications and postal services for the first time since being appointed last month, to brief the committee on the implementation of a turnaround strategy.

The cash-strapped entity was placed under administration in November following prolonged labour unrest.

The post office's financial constraints continue to affect its ability to pay creditors resulting in intermittent disruptions to day to day operations.

As it stands, the backlog amounts to R480 million.

About 18 of the entity's 2,445 branches have been closed because of an inability to pay rent.

Acting CEO Mlu Mathonsi says the entity has turned to the banks to raise money.

"And over and above our discussions with commercial banks where we are looking for debt funding, we are also in engagement with a shareholder, a number of proposals have been submitted. Support from the DTPS in this respect and there has been engagements with National Treasury as well."

As part of efforts to drive down costs, officials have told Parliament they've seen cost reduction benefits of nearly R78 million.

R5 BILLION NEEDED FOR TURNAROUND

Meanwhile, it's emerged the Post Office will need nearly R5 billion to fund its turnaround strategy.

The Post Office needs funding to pay off debt and upgrade existing infrastructure and equipment.

Chief Financial Officer Nichola Dewar says officials have sent a request to Treasury to fund a series of long-term investment projects.

"The total that we would require over a three-year period, is capEx of R2,6 billion and opEx of R800 million, bringing the total to R3,4 billion.

She says there are several initiatives, many in the IT space, that require substantial investment.

"The total for that IT infrastructure refresh is R514 million; it's a substantial amount but it will deliver a substantial benefit."