Siyabonga Mkhwanazi
THE STRIKE by the Communication Workers Union (CWU) is forecast to push the SA Post Office (Sapo) into a record annual R1.3 billion loss for the year to March.
CWU suspended its three-month strike in November. At the same time, the Sapo also announced that the government had bailed it out.
The Minister of Telecommunications and Postal Services, Siyabonga Cwele, has given Sapo a loan guarantee of R1.67bn as it lacked money to pay its day-to-day bills.
In its annual report tabled in Parliament, its independent auditors said Sapo incurred a loss of R361 million in the year to March 2014, up from a loss of R226m in the previous financial year. The loss was mainly attributed to a tough trading climate and a decline in customers.
The auditors warned that there was trouble ahead, as the state-owned company faced a loss this year of R1.3bn. Sapo highlighted in its annual report that it was a going concern and was not bankrupt.
However, it noted that Sapo had been struggling financially. “The organisation has been experiencing cash constraints, and as such has not had sufficient working capital,” said the annual report.
“The cause of the deterioration of the group’s liquidity position is both due to internal and external factors, such as the migration of customers towards digital communication, a general decline in the mail business revenue, as well as an inappropriate and inefficient business model.
“This has resulted in the group not generating sufficient revenue to finance its high-cost base and thus a material uncertainty of the entity’s ability to continue as a going concern for the foreseeable future,” it added.
To mitigate the situation, the company has sought and got an overdraft of R320m from one of the major banks. This cash would help it continue running.
The overdraft has been guaranteed by the government.
But this did not come without any conditions, continued the report.
The guarantee would be reduced by any funds given to Sapo by either the Department of Telecommunications and Postal Services or the National Treasury.
Finance Minister Nhlanhla Nene will table his budget in Parliament on February 25, and may announce further funds for the Sapo.
The other condition was that Sapo must obtain the “government’s approval of the terms of financing raised against the guarantee before concluding any agreements”.
All salary increases for staff members must be subject to approval by the minister of finance and the minister of telecommunications and postal services.
The increases for staff would also factor in salary demands by unions and the turnaround plan for Sapo, it stated.
But Sapo cautioned that the wage bill must be within the budget.