AT&T is exploring options for its Digital Life home security business, mainly to sell it, as it seeks to pay down debt following its acquisition of Time Warner.
AT&T entered the U.S. home security market with the introduction of Digital Life in 2013.
The service offers customers sensors and cameras so they can monitor their homes and pets on their phones. Digital Life reaches 80 U.S. markets, including large cities such as Chicago and New York. Cable operators turned to home security services a few years ago for a new revenue stream and as a way to rebuild margins whittled away by swelling programming costs.
Digital Life accounted for a tiny fraction of AT&T’s $163.8 billion in revenue in 2016. It is estimated to have between 400,000 and 500,000 customers. Given old trends and revenue, Digital Life may fetch close to $1 billion in the sale.
While this would do very little to reduce AT&T’s debt, which stands at $143.7 billion as on June 30, the sale could, however, be a prelude to more divestitures.
“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,” Moffett Nathanson research analyst Craig Moffett said in an email. “They will almost certainly have to find assets to sell to appease the bond rating agencies.”
AT&T said it expects the Time Warner acquisition to close by the end of the year. The deal is currently under antitrust review by the U.S. Department of Justice.
As AT&T braces for debt payments following its planned $85.4 billion purchase of Time Warner, the telecom giant is exploring options for its Digital Life home security business, including a sale of the unit, Reuters reports.
Last month, AT&T sold LifeShield, the home security unit of DirecTV, to private equity firm Hawk Capital Partners for an undisclosed sum. This was also a step closer to paying off the debt.
A Digital Life sale would mark AT&T’s withdrawal from the home security market that it attempted to infiltrate in 2013.