With the pending AT&T and Time Warner merger in the air, AT&T Inc is considering selling its Digital Life home security business to relieve debt from the merger. AT&T plans to acquire Time Warner for $85 billion, adding to their accumulating debt, which reached about $143.7 billion on June 30.
AT&T’s home security business was fairly small to begin with.
The revenue Digital Life produced for AT&T in 2016 was only a small portion of their overall revenue totaled at $163.8 billion. Digital Life for AT&T was a fairly new division for AT&T, which they introduced back in 2013, and now provide home security services like sensors and cameras to about 400,000 to 500,000 customers. They reach about 80 U.S. markets, including big cities like New York and Chicago but still fall short in competition to their cable rival, Comcast Corp. Comcast introduced their home security services, Xfinity, a year earlier than AT&T and has about a million customers, outnumbering Digital Life’s subscriptions. It seems that AT&T is choosing to leave the security space as Comcast continues to grow their services.
What does the future look like for home security services within the
Telecommunications companies started offering home security services as a new source of revenue and to assist with increasing programming costs. Recently, there have been an increasing number of buyouts in the home security space. Home security companies like ADT Corp and Protection 1 have already been bought out and merged together. LifeShield, AT&T’s home security unit of DirecTV, was also sold to private equity firm Hawk Capital Partners for an undisclosed sum.
The business’ sale value is said to be estimated at about $1 billion, which barely makes an impact on reducing their total debt. However, sources have discussed that the sale could be a ‘prelude to more divestitures.’ This statement has yet to be confirmed by AT&T, and sources are currently being kept confidential for privacy reasons.
What’s the current status of the acquisition?
The Time Warner and AT&T merger is expected to close by the end of the year, and is under antitrust review by the U.S. Department of Justice. Merger conditions between AT&T and the D.O.J have finally reached an advanced stage, according to the Wall Street Journal. There have been a few roadblocks to getting the D.O.J approval for the transaction. One of the biggest issues under review has been AT&T’s plan on handling consumer data from Time Warner’s wireless subscriber base and viewership of its channels. Sources say they’re currently reviewing if AT&T should be permitted to sell consumer data to rivals. If they’re able to start selling consumer data, then the merger has potential to compete better in the digital advertising space against household tech names like Facebook and Google. If that’s the case, then it may seem like AT&T is heading towards a different direction than their rivals in the telecommunications industry.