AT&T®, one of the best internet service providers of the country, has started to explore options for their Digital Life home security business, including selling the business, as they are seeking to pay down the debt following their planned 85.4 billion acquisition of the Time Warner Inc. This process of selling the subsidiary business will mark a reversal for AT&T® that entered the home security market in the US in 2013, with the introduction of Digital Life.
Digital Life from AT&T® offers users cameras and sensors that will allow them to monitor their homes on their smartphones. Digital Life only accounted for a small portion of the 163.8 billion dollars revenue of AT&T® in 2016. The business is estimated to have about 400,000 and 500,000 users and might fetch about a billion dollars when sold. However, this will not do much to decrease the debt of AT&T® that totals to 143.7 billion dollars.
Sources say that the sale of Digital Life could be a prelude to more sales of AT&T® subsidiaries. “AT&T will carry an incredible debt load (after the Time Warner deal closes), which is a risky proposition for a company with declining revenues,” MoffettNathanson research analyst Craig Moffett said. “They will almost certainly have to find assets to sell to appease the bond rating agencies.”
AT&T® said that they are expecting the Time Warner acquisition, which is currently under the review to go through by the end of 2017. Digital Life from AT&T® reaches eighty markets in the United States, which include large cities like New York and Chicago. However, it is not a match to the scale of the rival service from the US cable company Comcast Corporation®.
Comcast® had introduced their Xfinity® Home service in 2012 and they are approaching one million users this year. Before a few years, cable operators turned to home security services to open a new revenue stream. It is reported that the home security companies and buyout firms might show interest in the Digital Life unit of AT&T®. For instance, the private equity firm Apollo Global Management LLC bought the home security business ADT Corp for $7 billion in 2016.
It is to be noted that AT&T® has also sold the home security unit of DirecTV®, LifeShield to a private equity firm named Hawk Capital Partners last month, but the details of the sale are not yet disclosed.