Daily Management Review

AT&T Thinks Of Selling Its ‘Digital Life’ Unit Of Home Security Under ‘Debt Load’


Waning revenue and the pressure of paying debt sets AT&T on the road to divestiture.

The AT&T Inc. is considering to sell its “Digital Life home security business” for paying its debt after the “planned $85.4 billion acquisition of Time Warner Inc”. If the sale takes place, AT&T would move on a “reversal” gear for in the year of 2013, the company had launched its “Digital Life” in the “U.S. home security market”. With this service customers with the help of cameras and monitors could keep an eye on “their homes and pets on their phones”.
However, in 2016, Digital Life’s revenue contributed only “a tiny fraction” to AT&T’s total revenue income. While, the sources estimates that Digital Life should have “between 400,000 and 500,000 customers” potentially could be sold nearly at “$1 billion”.
Although, with the sale amount AT&T will not be able to pay off its total debt of “$143.7 billion” as on 30th of June, but this may set the company on the road to “more divestitures”, think the sources who chose to remain anonymous. In the words of Craig Moffett, an analyst at “MoffettNathanson research”:
“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. They will almost certainly have to find assets to sell to appease the bond rating agencies.”
The acquisition of Time Warner is likely to complete by the “end of the year”, at present the deal is under “antitrust review by the U.S. Department of Justice”. The reach of Digital Life extends to as many as eighty markets in the U.S. including New York and Chicago.
However, it failed to match the “scale of U.S. cable company Comcast Corp's (CMCSA.O) rival service”, whereby the latter launched “its Xfinity Home service in 2012”. According to Reuters:
“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”.
In fact, sources think that “home security companies” as well as buyout firms are taking interest in the above mentioned unit AT&T. In fact, the “home security unit of DirecTV” at AT&T, LifeShield, has been bought over by “Hawk Capital Partners” sometimes last month, although the amount has not been disclosed yet.

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