Post Office won't be privatised, says new CEO

Mark Barnes is the new chief executive of the South African Post Office. (Image courtesy of Finweek)
Mark Barnes is the new chief executive of the South African Post Office. (Image courtesy of Finweek)

Johannesburg - Turnaround plans at the South African Post Office do not include any talk of privatisation, says the state-owned company’s new chief executive officer.

Cabinet on Thursday approved the appointment of Mark Barnes as the Group Chief Executive Officer of the South African Post Office (Sapo) with his five-year term expected to start on January 15 2016.

Barnes is currently the biggest shareholder and executive chairperson in investing and trading solutions company Purple Group. He was also previously an investment banker at Standard Corporate and Merchant Bank (SCMB) and former head of private equity firm Brait.

Government has launched a ‘turnaround’ process at Sapo which last month announced that it’s struggling to pay staff salaries after it reported a preliminary net loss of about R1.1bn earlier this year.

Barnes told Fin24 on Thursday that he sees Sapo as ultimately becoming profitable by adopting to the internet age and not just “delivering letters”.

But he added that privatisation is not on the cards for Sapo as part of its turnaround plans.

"What we're going to do now has got nothing to do with privatisation; it's just got to do with turning a business around in accordance with their strategic turnaround plan and making it a viable business-connected business,” he told Fin24.

One key advantage that Barnes plans to tap at the Post Office includes the “legislative protection” it has as a state-owned entity, its “very low cost of capital” and its wide reach across the country.

“I put the proposition forward to government some time ago that actually the way out of the difficulties at the Post Office is growth not restraint and that it is rather well positioned if you think of it as not just the Post Office but as this organisation with an extreme reach in terms of its representation in the country with something like 2 500 points of representation, 1 500 branches,” Barnes told Fin24.

“Inside the Post Office is a bank with a seriously low cost of capital and it's a very close to most of the population of our country,” Barnes said.

These features could be adapted to help Sapo take on courier competitors as well, Barnes added.

Barnes takes the reins at Sapo after instability has dogged the company.

A months-long strike in 2014 over temporary workers’ pay resulted in postal services being disrupted. After the strike ended in November 2014, the Sapo board resigned and government put the company under administration.

Barnes now takes over from acting CEO Trevor Ndlazi after the company’s former permanent chief executive Christopher Hlekane’s contract was terminated in September 2015.

ZAR/USD
17.39
(+0.55)
ZAR/GBP
22.67
(+0.70)
ZAR/EUR
20.46
(+0.38)
ZAR/AUD
12.41
(+0.78)
ZAR/JPY
0.16
(+0.95)
Gold
1933.20
(+1.45)
Silver
25.77
(+3.80)
Platinum
943.00
(+2.44)
Brent Crude
44.46
(-1.09)
Palladium
2140.00
(+2.32)
All Share
57402.93
(+0.41)
Top 40
53058.76
(+0.43)
Financial 15
10225.10
(+0.09)
Industrial 25
76376.60
(+1.13)
Resource 10
58454.32
(-0.38)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 966 votes
It depends on how the funds are used.
74% - 6418 votes
No. We should have gotten the loan elsewhere.
15% - 1325 votes
Vote