AT&T Exploring Sale of Digital Life Home Security Business, Report Says
AT&T is considering selling the security and home automation business unit to ease the debt load from a pending purchase of Time Warner, Reuters reports.
DALLAS — AT&T (NYSE: T) is exploring a potential sale of its Digital Life home security business to lessen its debt load once it closes its $85.4 billion acquisition of Time Warner, according to a report from Reuters.
Digital Life could be worth close to $1 billion, sources told Reuters. The unit, which accounted for a tiny fraction of AT&T’s $163.8 billion in revenue in 2016, is estimated to have between 400,000 and 500,000 customers. While a sale would do little to reduce AT&T’s debt, which totaled $143.7 billion on June 30, it could be a prelude to more divestitures, the sources added.
AT&T launched the home security and automation service in 2013 in an effort to broaden its connected devices and services offerings. Digital Life comprises a variety of devices and services including motion alerts, energy controls and live video feeds, and is available in 80 U.S markets.
The sources requested anonymity because the deliberations are confidential. AT&T declined to comment.
“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 told Reuters in an email. “They will almost certainly have to find assets to sell to appease the bond rating agencies.”
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AT&T has said it expects the Time Warner acquisition to close by the end of the year. A Wall Street Journal report on Thursday indicated the acquisition of Time Warner is now being discussed by regulators in terms of merger conditions that might be placed on the combined company. The approval process has reportedly entered the late stages at the U.S. Department of Justice.
Buyout firms and home security companies may show interest in the AT&T unit, according to Reuters. Private equity firm Apollo Global Management (NYSE: APO), for example, bought ADT Corp. for about $7 billion in 2016 and merged it Protection 1 and ASG Security.
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