AT&T considers sale of
home security business: sources
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[August 19, 2017]
By Liana B. Baker
(Reuters) - AT&T Inc <T.N> is exploring
options for its Digital Life home security business, including selling
it, as it seeks to pay down debt following its planned $85.4 billion
acquisition of Time Warner Inc <TWX.N>, people familiar with the matter
The divestiture would mark a reversal for AT&T, which 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 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 and may fetch close to $1 billion in a sale, the sources said.
While this would do little to reduce AT&T's debt, which totaled $143.7
billion on June 30, the sale could be a prelude to more divestitures,
the sources added.
They 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 said in an
email. "They will almost certainly have to find assets to sell to
appease the bond rating agencies."
AT&T has 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.
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The AT&T logo is pictures on a building in Los Angeles, California,
U.S. August 10, 2017. REUTERS/Mike Blake
Digital Life reaches 80 U.S. markets, including large cities such as Chicago and
New York, but it has not matched the scale of U.S. cable company Comcast Corp's
<CMCSA.O> rival service. Comcast introduced its Xfinity Home service in 2012 and
said this year that it was approaching 1 million customers.
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
Buyout firms and home security companies may show interest in the AT&T unit, the
sources said. Private equity firm Apollo Global Management LLC <APO.N>, for
example, bought home security company ADT Corp for about $7 billion in 2016 and
merged it with smaller U.S. peer Protection 1.
Last month, AT&T sold LifeShield, the home security unit of DirecTV, to private
equity firm Hawk Capital Partners for an undisclosed sum.
Glenn Lurie, a senior AT&T executive who oversaw Digital Life, said earlier this
month that he would retire in September.
(Reporting by Liana B. Baker in San Francisco; Additional reporting by Anjali
Athavaley in New York; Editing by Lisa Von Ahn)
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