Lack of IOT growth in SA was SqwidNet’s biggest undoing
Remgro-controlled Community Investment Ventures Holdings (CIVH) says the decision to wind-down operations of its Internet of things (IOT) unit SqwidNet boils down to the IOT technology failing to take off in SA.
So said Raymond Ndlovu, CEO of CIVH, in a telephonic interview with ITWeb this afternoon.
SqwidNet was launched in November 2016 as the Sigfox operator in South Africa. It was driving innovation through a nationwide IOT network that is low-cost and low-power.
The company began through a partnership between Dark Fibre Africa (DFA) and global IOT operator Sigfox.
DFA is a subsidiary of CIVH.
Said Ndlovu: “SqwidNet is over six years old, founded under the auspices of the DFA Group to be its Sigfox licence-holder and operator in South Africa. It’s still the largest operator in South Africa to set up an IOT national connectivity network.
“We set out to build that network and ended up covering a significant portion of the country, which made us the go-to IOT network for a number of different channel partners in various industries.”
However, he lamented that the rate of adoption of IOT, as a whole in South Africa, is still at a very early stage of development. The ecosystem is still in the process of growing, he noted.
“As a consequence, the revenue growth and adoption rate has been slow and low, and we have been struggling with the ability of the network to fund its operating costs.”
Last year, he added, with the pandemic and subsequent lockdown, as well as the economic climate, this exacerbated the situation.
“The goal of SqwidNet has been exploring various ways to try and attract additional investors to keep the network operational. To date, we have not been successful in that regard.
“So, as a board, we had to look at what the financial prospects of the business are, and with a lack of funding support, it became necessary for the board to take proactive actions.”
Therefore, Ndlovu said, the company immediately initiated a voluntary restructuring or winding-down process.
“The first thing meant we have to reduce the staff headcount,” he noted.
According to Ndlovu, there are 24 people employed at SqwidNet. However, he said the company will try everything within its power to absorb as many people as it can in the group.
“Secondly, we are going to maintain critical staff to maintain the operability of the network. Lastly, we are looking to engage with our key customers on how best to move forward.
“We have to do this very quickly, and we have to be decisive because of the inevitable strain this has caused – not only to customers but to employees as well. That engagement process is already under way. It is regrettable that we had to get to this point; however, financial circumstances have not been favourable.”
SqwidNet was a loss-making business for six years and it had not reached break even, he stated.
“IOT technology is still new in South Africa. Although the Sigfox technology has gained relative global traction, it is still competing with other IOT technologies on the global stage.
“We have attracted some customers and we are pleased with who we have been able to attract in various verticals, but we have not just reached the level of critical mass required to have the business commercially viable and sustainable.”
He said some of the customers are in the vehicle-tracking industry, those that provide smart meters, as well as security services firms.