Concerns about social grants as Telkom’s crucial IT contract with Post Office nears its end | Fin24

• Telkom said its contract with the South African Post Office to provide the IT services would expire soon. 
• The contract’s end reportedly has Post Office management concerned about the provision of grants.
• Telkom said it would respect the confidentiality of its contractual agreement with SAPO. 
• For more financial news, go to the News24 Business front page.

The expiration of Telkom’s contract to supply IT services to the South African Post Office (SAPO) could affect the provision of social grants to millions of South Africans.

While reports over the weekend said Telkom threatened to cancel its IT services to SAPO due to R225 million debt that SAPO owes it, the 40.5% state-owned telecommunications company said it was because a contract between the two was expiring.

The Sunday Times reported over the weekend that Telkom threatened to terminate its service to SAPO over the debt. Approached by News24 for comment on Monday, SAPO spokesperson Johan Kruger said the entity “does not comment on active contracts”.

READ | Despite ‘green shoots here and there’, Post Office needs cash after revenue nearly halves

SAPO CEO Nomkhita Mona reportedly warned Telkom that the termination of its communications services to SAPO would jeopardise grant provisions to 10 million South Africans.

A Telkom spokesperson told News24 that its current contract with SAPO expires soon and that it will consider new business opportunities based on the requirements and the capacity to deliver profitably. 

“If Telkom is invited by SAPO to participate in a SAPO process, Telkom will assess the opportunity in line with its standard business development assessment processes,” the spokesperson said.

Telkom said it would respect the confidentiality of its contractual agreement with SAPO and did not able to divulge its details. “We seek to find an amicable resolution to any challenges that may arise in respect of the work we carry out on behalf of our clients,” the spokesperson said.  

READ | Post Office in severe distress, may not be ‘going concern’, says AG

SAPO has been facing a number of financial challenges, including difficulty with paying the medical aid contributions of its employees to the medical aid provider, Medipos, after deductions. Trade union Solidarity secured an interim interdict in October compelling SAPO to pay R4.5 million in contributions.

Communication Workers’ Union general secretary Aubrey Tshabalala said workers’ pensions were not paid up to date for over two years and workers remain indebted on the outstanding medical aid bills.