PARIS (Reuters) - French start-up Sigfox, which builds networks to connect washing machines and other objects to the internet, says it is struggling to meet its growth targets due to high expectations for alternative, forthcoming 5G services.
The company, whose shareholders include French oil major Total (TOTF.PA) and U.S. group Salesforce.com (CRM.N), missed its revenue target last year, CEO Ludovic Le Moan told Reuters on Wednesday, but it still sees good prospects for its technology and aims to break even in the fourth quarter of this year.
If it reaches that target, it could seek a stock market listing, Le Moan said in an interview.
Sigfox seeks to tap into the burgeoning so-called Internet of Things (IoT) sector where it faces competition from two other emerging networks: LoRa, backed by French telecom operator Orange (ORAN.PA) and equipment maker Cisco Systems (CSCO.O), and NB-IoT, which is backed by Japan’s Softbank (9984.T).
These three companies’ wireless networks enable devices to transfer small volumes of data over a wide area while maintaining battery life over many years, whereas 5G services can carry much bigger volumes but cost a lot more.
“There’s a lot of noise around 5G these days,” Le Moan said.
“But these technologies that are being put in place are much more costly,” he added. “For telecom players, this is all about generating new revenue.”
The first standards for 5G, the next generation of broadband mobile internet, were recently approved with first commercial offers expected in 2019 or 2020.
The roll-out for 5G will cost billions of euros for each national market, compared with a few million for Sigfox’s IoT networks, Le Moan said.
Objects connected through Sigfox’s networks range from house alarms to public waste containers and water metres.
Set up in 2009, the Toulouse-based company generated revenues of 50 million euros in 2017, up from 32 million in 2016 but 10 million short of its initial target, Le Moan said.
Higher volume usage of IoT chips, such as those made by STMicroelectronics (STM.BN) or Texas Instruments (TXN.O), will help drive down the cost of IoT chips to a few cents per unit, making the technology more attractive, he said.
Sigfox, which has raised more 270 million euros over the last seven years and has 380 staff, currently has 2.5 million connected objects on its networks, Le Moan said.
Reporting by Mathieu Rosemain; Editing by Susan Fenton