Sigfox deadline looms: Buyers weigh purchase or its lights out for French 0G operator

Having been placed under Commercial Court protection from its creditors for six months, the board of France-based Sigfox, the ultra narrowband (UNB) network operator, asked the Toulouse Court to shorten the period of administration to just three weeks. That protection period expires on Friday, February 25th 2022, and the ailing company’s Directors evidently believe a final announcement about its rescue can be made then, writes IoT Now’s editorial director, Jeremy Cowan. (See also: Sigfox goes into receivership after raising and spending €300mn, seeks buyer in 6-month court protection)

Based in Labège, southern France, Sigfox’s current and previous customers reportedly include 7Eleven, Airbus, BMW, BNP Paribas, DHL, PSA Groupe, Michelin, Siemens and Telefonica.

One leading European figure in the Internet of Things who is also a shareholder in Sigfox, is Jaap Groot, the CEO of Ignion. Barcelona-based Ignion enables the Internet of Things (IoT) ecosystem with off-the-shelf antenna solutions. He told IoT Now, “It’s possible there’s not enough cash to last for the six months, which is the standard maximum term for protection from creditors given by the French courts. Although that can be extended by the court if there’s the chance of a sale.”

Groot believes, however, that it is more likely Sigfox already had offers on the table when it went into Commercial Court protection (Règlement Judiciaire, or RJ).

Speaking off the record, one Sigfox insider confirmed this, putting the number of companies or groups showing initial interest in acquiring some Sigfox assets as high as 10.

Jaap Groot

Sigfox’s investment strategy had been to build its own network in France, the United States, and Germany to cut operating costs and raise capital its German subsidiary was sold by Sigfox in 2020. (Also see: Sigfox and Cube Infrastructure Managers create DACH-wide partnership in IoT infrastructure). These three Sigfox-owned networks were augmented by deals with local partner networks, so that Sigfox now claims a presence in 75 countries.

In June 2021, Sigfox reported that Dubai-based iWire, had raised $34 million (€29.95 million) in Series A funding, led by Noor Capital and supported by Bpifrance. This was intended “to accelerate its development and enter new markets. In this fundraising, iWire has notably received support from the French public investment bank (Bpifrance) with a Buyer Credit of $25 million (€22.03 million) dedicated for the development of Sigfox networks over 12 new countries in Asia, the Middle East and Africa. In addition, iWire intends to accelerate the development of its subsidiary ‘iWire Technologies’, specialising in the production of connected devices which will be distributed on all five continents, with a particular focus on European and US markets.”

Losses exceed revenues

Although its CEO, Jeremy Prince, told IoT Now’s Trending Tech Podcast last year that the company had raised a total of €300 million in funding, the parent company is not believed to have been cashflow positive. Groot says there is anger among investors that Sigfox had not warned the market it might need to go into administration. The most recent publicly-available figures indicate an annual loss of €90 million on revenues of €23 million. Newer figures are available to buyers, and have been seen by IoT Now, but are protected by a Non-Disclosure Agreement (NDA).

‘Emotion and excitement’

IoT Now asked for a comment from Sigfox’s longest-standing advocate in Asia-Pacific, Henri Bong, co-CEO & co-founder of Unabiz in Singapore. Unabiz is described as “a proven Massive Internet of Things (IoT) service provider based in Asia. The company specialises in providing affordable, well-designed solutions that are energy-efficient, highly scalable and simple to deploy at a fraction of conventional cost.” He has not commented to us directly, but Unabiz issued a public statement online. In it, Henri Bong describes his “emotion and excitement” at the news that Sigfox had been placed into Court protection while it seeks new investment.

Bong shares his “Emotion because having been the 1st employee (of) SIGFOX in Asia Pacific and … because it is a page that turns for many sigfox (sic) colleagues who have become friends over time. Emotion because Unabiz started with SIGFOX technology, becoming the first national LPWAN operator in Asean (Association of South East Asian Nations) with an ecosystem and significant customers ranging from Japan to Australia.”

“Despite this,” Bong continues, “I can’t help but share my excitement with you. Excitement because SIGFOX technology and services will continue to work and probably even more efficiently. Excitement because this RJ (court administration) will be synonymous with a radical change of shareholder(s), vision, and probably business model. Excitement because in any crisis there are huge opportunities.”

Arguably his most significant comment came in closing when he says, “Unified LPWAN World … Keep tuned…”. It is perhaps unsurprising, therefore, that a number of IoT industry observers expect Unabiz to be influential in the sale, if not the outright buyer of key Sigfox assets from the Administrator. We will know later this week if Bong or others have been successful in unifying the LPWAN world.

Is there interest from Semtech or Actility?

Early reports in the French media suggested that Semtech, known globally for its LoRa device-to-Cloud platform, is among the companies eyeing this opportunity. Semtech has established a successful ecosystem for its long range, low power IoT solution. But insiders have told IoT Now that, although Semtech was initially looking at this distress sale, the company may have chosen not to complete within the shortened three-week sale deadline.

Other observers are tipping an acquisition by France-based network solutions vendor, Actility. But at present, this too remains speculation.

Bpifrance, the French sovereign investment fund, is rallying support for the one-time licorne (unicorn) and pride of the Parisian tech investment scene.

“Perhaps Orange will be encouraged to take Sigfox on, now that ithas appointed a new CEO,” Groot suggests. (Also see VanillaPlus: Christel Heydemann appointed CEO of Orange) “They will want to protect the image of French tech,” he adds. So far, however, Orange does not seem to be a favourite in speculation about new owners. The French Presidential election begins on 10th April and Groot believes the government will want this restructuring to be resolved by then.

Administration enables staff lay-offs

What is known is that French employment law makes it difficult, compared to the US and UK for example, to lay off staff. In normal trading conditions, insiders say that it might cost a new owner anything from €5 million to €10 million to reduce the Sigfox cost base by laying off some staff. France’s equivalent of US Chapter 11, Règlement Judiciaire allows businesses to do some things that are not otherwise allowed, including reducing the number of employees.

Chris Bataillard

Inevitably, Sigfox is saying nothing ahead of the February 25th deadline, but rumours in the market suggest that there were numerous potential buyers when the company first announced it was in administration. That number is likely to have reduced now that the company’s accounts and liabilities have been shared by the Administrators, CBF Associes.

Chris Bataillard, CEO and founder of Wireless Network Developments Ltd owns four successful Sigfox Latin American network operators; in Brazil, Colombia, Mexico and Peru. He says, “The receivership is something we’ve been expecting as a possible outcome. Why? Because Sigfox had a lot of baggage. And the only way to get rid of it under French rules is this financial restructuring.”

Sigfox is also known to have many layers of equity from multiple funding rounds, each round with different rights over previous rounds. The company has debt, government loans, corporate guarantees for its US operations.

“By going into this (court protection) process they’re able to clean the house. The fundamental cause is a balance sheet restructuring, it’s not a business problem,” says Bataillard.

Jeremy Cowan

The one thing above all that the operators need from Sigfox is the Cloud and there are reported to be many agreements in place for that to be sustained. The cost of running that is a fraction of running all of Sigfox. The company’s business model has been constantly evolving and this may accelerate its evolution. Sigfox’s customer-facing operations are quite straight-forward, but there will be room to simplify how revenue is shared between the operators, their pricing models and billing systems.

Speaking on condition of anonymity, one insider told IoT Now, there are four categories of buyers; chipset vendors, cloud platform providers, network operators (some of whom have been looking at putting together a consortium), and financial companies. Sigfox have been converting themselves for pure-Cloud and sold the German network two years ago.

Sigfox’s future should become a good deal clearer after Friday, February 25th. But if the lights stay on as seems likely, it remains to be seen who gets the good deal.

Report by Jeremy Cowan, editorial director, IoT Now & VanillaPlus.

Comment on this article below or via Twitter: @IoTNow_OR @jcIoTnow

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