Sigfox has lost another of its most senior executives with the departure last week of Rodolphe Barronet-Fruges, the man responsible for the global deployment of the company's networks, according to three sources with knowledge of the matter.
His exit from the French Internet of Things specialist follows an exodus of senior managers during the past year that began with the departure in March 2017 of then deputy CEO Xavier Drilhon, who quit after clashing with CEO and co-founder Ludovic Le Moan on company strategy. (See French Toast? Sigfox on Skid Row.)
As executive vice president of networks and operators, Fruges is arguably the most important figure to have left Sigfox since the staffing upheaval began nearly a year ago.
Responsible for the global rollout of Sigfox's networks, he had been at the company since 2013 and has previously worked for Orange, the French telecom incumbent, and in both Europe and the US during a 20-year career in the telecom industry.
In an internal Sigfox presentation obtained by Light Reading several weeks ago, Fruges is named first in a list of 13 "key people" at the company.
Including Fruges, at least five of those "key people" are no longer at Sigfox. The other executives named in the presentation who have left Sigfox are: Thomas Nicholls, the former head of communications; Remi Lorrain, the vice president of operations; Jerome Burriez, the chief information officer; and Allison Junoy, the group general counsel.
Sigfox has also recently lost Allen Proithis, the head of its struggling North American business, who appears -- like Drilhon -- to have quit after clashing with Le Moan. Thierry Siminger, the former head of Sigfox in the Middle East and Africa, left in May 2017 following a similar disagreement with Sigfox's CEO. (See Sigfox Sheds More Senior Staff, Including North America CEO and Sigfox in Peril as Senior Execs Exit – Sources.)
Other senior executives to have quit since March 2017 include Stuart Lodge, the executive vice president of global sales, and spectrum manager Thomas Schmidt.
The company has, though, appointed Christian Olivier as president of Sigfox USA. Olivier will be responsible for expanding the company's business in the US, where it runs its own IoT network. Other recent recruits include Franck Siegel as chief delivery officer and Raoti Chetih as chief adoption officer. Siegel previously worked at South African IT company Dimension Data, while Chetih ran a business park in Lille called EuraTechnologies.
But the trend is certainly towards senior departures rather than arrivals, and the ongoing turmoil points to major disagreements between Le Moan and other senior executives over the Sigfox strategy.
While former executives have been unwilling to shed more light on the nature of those disagreements, Sigfox's business model has long been controversial and the company has also missed some key targets in the last couple of years.
Last week, Sigfox said it had generated €50 million ($62 million) in revenues in 2017, about €10 million ($12.4 million) short of its target, even though it has only 2.5 million connected devices on its network.
The revenues figure beat some expectations, and marked a sharp increase compared with sales of €32 million ($40 million) in 2016, but raises questions about the sources of those revenues.
Having previously claimed to have more than 10 million devices on its networks, Sigfox now says the number of connected devices is just 2.5 million. Le Moan has previously indicated that Sigfox can provide connectivity for as little as $1 per device annually: While that is clearly the very low end of Sigfox's tariff range, it suggests that competitive pricing is certainly part of the Sigfox pitch and would constrain connectivity revenues.
Operators using LoRa, a rival technology, advertise per-device rates that range from €5 ($6.20) to €12 ($14.80) per year. Even if Sigfox were generating as much as €8.5 ($10.50) per device annually -- the midpoint of this LoRa range -- it would make no more than €21.25 million ($26.2 million) in connectivity revenues with just 2.5 million active connections.
It seems very likely, then, that the majority of its revenues are coming from the equipment charges and upfront fees it derives from its network partners: In addition, Sigfox claims a 40% share of any service revenues those partner companies generate. Light Reading's sources have suggested that translating network-related revenues into recurring services revenues has been a much bigger challenge than initially envisaged.
Sigfox claims to have deployed networks in 45 countries and aims to reach 60 by the end of this year, when it also aims to become profitable. However, the company may have hoped for more from the giant US market, where it missed a goal of covering 40% of the country by the end of 2017.
It has also already lowered its target for active connections this year. In January, when announcing the appointment of Siegel as chief delivery officer, it said it was aiming for 10 million connections by the end of 2017. Announcing revenue numbers last week, it said "it plans to connect up to 6 million objects by the end of the year ."
Sigfox has raised about €277 million ($342 million) in overall funding since it was founded in 2009 but appeared to fall short of fundraising goals in 2016 when it claimed to have bagged €150 million ($185 million) from new and existing investors. Earlier that year, Le Moan was reported by French newspaper Les Echos to be on the prowl for as much as €500 million ($617 million). (See Sigfox Defies Critics to Raise €150M in Funding.)
Sigfox has also faced criticism in its dealings with customers and partners. One source in the partnership community, who previously spoke with Light Reading on condition of anonymity, described the company as "unethical" in its demands.
Besides sharing 40% of service revenues with Sigfox, and assuming the huge investment burden of building a Sigfox network, partners sign contracts that allow Sigfox to buy their assets at accounting value at the end of a seven-year agreement, said that source.
"You enter into negotiation with Sigfox and after many months it appears with this bunny-in-the-hat clause that is totally absurd," he said. "This clause is something that all SNOs [Sigfox network operators] have."
In mid-2016, a French customer called Nigiloc, developing tracking gadgets for bicycles, told Light Reading that Sigfox's technology had not met its quality threshold, and appeared to be unsuitable when "mobility" was a key requirement. (See Sigfox Said to Face Customer Backlash.)
Clear Channel Outdoor, an advertising company, and MAAF, a French insurance firm, were also rumored to have had problems with Sigfox. At the time, Sigfox would not deny those companies had experienced difficulties but insisted all three were among its earliest customers and that any problems might have been unrelated to connectivity.
Despite these criticisms, the Sigfox technology is still highly regarded in many parts of the IoT industry. Using unlicensed spectrum, it can provide connectivity for smart meters and other devices transmitting small bursts of data at just a fraction of the cost of older cellular technologies.
But the company faces a growing challenge from NB-IoT, a cellular technology conceived in response to Sigfox and standardized last year. China's Huawei, which has invested heavily in NB-IoT, expects the number of global NB-IoT connections to hit 150 million this year. During a recent interview with Reuters, Le Moan also acknowledged that forthcoming 5G technology posed a potential threat to Sigfox.
Neither Fruges nor Sigfox responded to Light Reading when asked about the circumstances surrounding the latest executive departure.
Sigfox also failed to respond to a request for more information about the sources of its revenues in 2017.
— Iain Morris, News Editor, Light Reading