However, after three years, the situation worsened, and SAPO is now technically insolvent, with total liabilities of R4.08 billion exceeding total assets. SAPO has, in essence, destroyed R9.28 billion in value between 2019 and 2022, resulting in a dysfunctional and bankrupt state-owned enterprise.
The former CEO said, “The organisation is bankrupt, and I would argue that it has been technically insolvent for some time.” Earlier this year, SAPO was placed under provisional liquidation for failing to settle its substantial debt. SAPO has lost money since 2013 and has been forced to shut down branches and cut thousands of jobs over the years.
The chart below displays SAPO’s equity (also known as net worth) between 2017 and 2022. It is evident that the situation has significantly worsened since 2019, and the company is now facing financial ruin.
Barnes expressed sadness over the loss of value at SAPO but remains optimistic that it can be rescued. He emphasised the importance of having a post office in the country, and opposed the private sector’s takeover of SA Post Office’s responsibilities, stating that their profit-driven focus would only benefit 5% of the population.
In 2021, Barnes and an undisclosed consortium attempted to purchase a controlling stake (60-75%) in SAPO to salvage the struggling enterprise. However, their offer was rejected. In February 2022, Barnes shared his proposal with Khumbudzo Ntshavheni, the then Communications and Digital Technologies Minister. His plan aimed to transform the post office into a national treasure by having an independent entity determine the group’s net asset value at the time of purchase and forecasted losses’ current value. The difference between the two values would be Barnes’ purchase price.
Barnes claimed that his offer, which would have avoided the government bailout, is now worth R2.4 billion less than when he made it. Despite SAPO’s present insolvency, he reaffirmed his willingness to purchase the enterprise.
Former SA Post Office CEO Mark Barnes
Terms and Conditions for Turning Around SAPO: Three Key Requirements
According to Barnes, a successful turnaround of the South African Post Office (SAPO) hinges on meeting three essential conditions.
Firstly, there must be a mutually agreed strategy to move forward.
Secondly, SAPO requires an estimated £400 million in capital to pay off its liabilities and stabilise the business for the future.
Thirdly, the post office needs strong leadership, specifically a management team with a three-year mandate to deliver a capable, efficient organisation.
By meeting these conditions, SAPO can save its invaluable infrastructure and maintain a vital channel of communication between the South African government and its people, while also protecting numerous jobs and valuable data that can benefit the country.
However, if the post office is not salvaged, all its current services and revenue will be taken over by the private sector.
Barnes argues that privatisation would be “fundamentally wrong and inappropriate” as SAPO possesses infrastructure that is commercially irreplaceable. He further asserts that the private sector is primarily driven by profit, and therefore, would only serve a small portion of the population, no more than 5%.
Barnes insists that his offer to save SAPO is conditional on the process being overseen by the Auditor-General with proper due diligence and that he is given three months to raise the necessary capital.