Post Office looking to sell ‘non-core’ properties to generate revenue

The cash-strapped South African Post Office (SAPO) was now looking towards selling “non-core properties” and cutting back on expensive property leases to increase revenue which fell sharply in the wake of the Covid-19 pandemic.

SAPO was also looking at increasing income by renting out vacant buildings and relocating to company-owned offices to save on rental costs.

This emerged as the SAPO board and acting CEO Reneilwe Langa briefed Parliament’s portfolio committee on communications on Tuesday.

SAPO had 641 company-owned and 1 120 leased buildings with the value of its owned properties totalling R2.8 billion.

Langa said key to SAPO’s property strategy included:

– Refurbishing and relocating back to company owned buildings to save on rental cost;

– Increase rental income by renting out vacant buildings and excess space;

– Disposal of non-core properties to reduce holding and maintenance costs;

– Re-development of some buildings;

– Improve building statutory compliance;

– Rent out space for cellphone towers (masts); and

– Maintenance will also be limited to critical buildings due to a funding deficit.

Langa said SAPO was severely impacted by the Covid-19 pandemic and lockdown measures.

She continued: “The return of customers to the branches has been slower than anticipated. Business operations are being normalised by clearing the accumulated backlogs. A key focus has been placed on revenue retention and recovery to bring some financial stability in the short term. The high fixed costs are being addressed to lower operating costs in staff, transport, security, properties and technology.”

She said the turnaround plan was approved in July and would be integrated into the 2021-2022 financial year corporate plan in order to revise the medium-term outlook.

“The plan responds to the business correction and recovery over the next 12 months. The positioning of SAPO as an affordable, reliable logistics and delivery company of choice that will attract business from the higher living standards measure [higher income groups]. Sustainability and relevance over the long term remains the key priority of the turnaround plan,” she said.

SAPO had, over the past four months, been unable to pay workers’ medical aid and pension fund contributions, employee risk benefits contributions as well as tax (SARS) obligations.

Last week, Fin24 reported that Post Office workers received a letter from MEDiPOS Medical Scheme which claimed SAPO had not paid contributions worth R213 million since 1 April.

Langa, however, told MPs that SAPO had a plan to overhaul the entire business and improve revenue.

She said they planned on recapitalising the logistics business by establishing partnerships with willing investors to revive SAPO’s logistics business segment.

To digitally modernise SAPO’s operations, Langa said, an omni-channel enterprise application platform (EAP) platform was currently in procurement and planned to launch later this year.

She also said SAPO was currently in the process of launching its e-Mall platform to the market.

Part of the digitisation plans included efforts to monetise the large amounts of data that existed within the organisation and to mine existing data in compliance with privacy laws.

Langa said the social grant beneficiary payments at physical pay points was a significantly demanding operation.

“The SA Post Office is exploring partnering with industry experts to alleviate operational demands facing the organisation currently,” she said.

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