Wi-Fi network provider VAST Networks will be shut down, a spokesperson for VAST’s board of directors has told MyBroadband.
After years of seeking a buyer for the floundering company, Dimension Data and Naspers have decided to pull the plug.
VAST’s statement comes after industry sources told MyBroadband that staff had received letters informing them that the Wi-Fi network operator will be shutting down next week.
VAST Networks was established in 2014 as a joint venture between Dimension Data and Naspers, which own 51% and 49% of the company respectively. It launched in November 2015 with the aim to deliver carrier-grade Wi-Fi in Southern Africa on an open-access basis.
The company struggled to generate enough revenue to stay afloat, and MyBroadband learned last month that its expenses were far higher than its revenue.
VAST’s business model relied partly on generating money from selling Wi-Fi bundles and mobile advertising on its portal.
According to one source, the revenue generated through these channels was not enough to cover the operating costs for the network, let alone to allow the company to invest in new projects or network upgrades.
Unable to find a buyer
Shutting down VAST comes with a significant reputational risk for Dimension Data and Naspers, as it supplies Wi-Fi to hospitals, shopping centres, hotels, and restaurants.
The shareholders would therefore likely have preferred to sell the company. At one stage, Vodacom was rumoured to be in talks to buy VAST, but ultimately no buyer could be found.
“Numerous options have been explored to ensure the continuation of its business, including further shareholder investment, partnerships and the sale of VAST,” the board told MyBroadband.
The VAST board said that the decision to wind up the business comes after an intensive 18-month sale process with interested parties. Unfortunately, an agreement could not be concluded and all alternate options have now been exhausted.
As a result, the decision was made to shut down VAST Networks.
“Since its inception, VAST built and extended its carrier-grade network to thousands of Wi-Fi hotspots in highly trafficked areas, serving South Africa’s appetite for affordable connectivity and enabling digital inclusivity,” the board said.
During its run, VAST launched several initiatives including a Wi-Fi analytics system, consumer Wi-Fi vouchering, and mobile network operator data offload trials.
“Despite these efforts, the company continued to sustain losses, making continued investment therein unsustainable due to the challenges in monetising the investments made,” the VAST board said.
The process to wind up VAST Networks will start “on or about” 25 October 2019.