VAST Networks is facing big financial problems, with its shareholders considering pulling the plug on the Wi-Fi network provider.
This is according to people close to the company, including a former employee who spoke to MyBroadband on the condition of anonymity.
VAST Networks was established in 2015 as a joint venture between Dimension Data and Naspers, which own 51% and 49% of the company respectively.
The company is an open-access Wi-Fi network infrastructure provider, delivering carrier-grade Wi-Fi in Southern Africa.
VAST has been struggling to generate enough revenue to stay afloat, and it is understood that its expenses are far higher than its revenue.
According to the former employee, Dimension Data and Naspers have stopped funding VAST, which leaves the company in a desperate financial situation.
Industry speculation suggests that Dimension Data and Naspers are even considering shutting VAST down.
Struggling to fund new projects
VAST’s financial problems mean that the company is struggling to fund new projects which are capital-intensive.
According to the former employee, some projects are started with great promise but fizzle out due to a lack of funding.
Questions have also been raised about VAST’s business model, which partly relies on generating money from selling Wi-Fi bundles and mobile advertising on its portal.
According to one source, the revenue generated through these channels is not enough to cover the operating costs for the network, let alone to allow the company to invest in new projects or network upgrades.
Pulling the plug on VAST
MyBroadband has learned that Dimension Data and Naspers are keen to rid themselves of VAST and are willing to take drastic steps to accomplish this.
While selling the company is an option, interested parties would be more interested in buying the underlying assets than acquiring the loss-making company as a going concern.
Another option is to simply shut VAST and its network down. This option, however, comes with significant reputational risk.
VAST supplies hospitals, shopping centres, hotels, and restaurants with Wi-Fi access, which means that shutting down the network will leave these venues without Internet access for their clients.
This could make Dimension Data and Naspers look like merciless corporates – a perception they would most likely prefer to avoid.
No feedback from VAST, Dimension Data and Naspers
MyBroadband asked VAST for feedback about its financial problems and what the future holds for the company, but it did not answer any questions sent to it.
Instead, VAST CEO Grant Marais told MyBroadband it is the policy of VAST and its owners not to comment on speculation or rumour.
Dimension Data and Naspers would also not provide details about their plans for VAST and whether they are considering shutting down the company.
An Internet Solutions spokesperson said it is the company’s policy that it does not respond to market rumour or speculation about any of its affiliates or subsidiaries.
Naspers did not comment by the time of publication.