AT&T is reportedly considering selling its Digital Life business to lighten its debt load once it closes its $85.4 billion acquisition of Time Warner.
The nation’s second-largest wireless network operator 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 including New York and Chicago.
AT&T last year expanded its international presence with the launch of O2 Home, a smart home service for customers in the United Kingdom that uses the Digital Life platform.
But Reuters reported this morning that the operator “is exploring options” for Digital Life that may include a sale of the business. The report, which cited unnamed “people familiar with the matter,” said Digital Life is estimated to have between 400,000 and 500,000 users and could garner roughly $1 billion in a spinoff.
That wouldn’t put much of a dent in AT&T’s overall debt of nearly $144 billion, Reuters, noted, but “could be a prelude to more divestitures.”
That debt will only increase with the takeover of Time Warner, of course, and Craig Moffett of MoffettNathanson told Reuters that the carrier “will almost certainly have to find assets to sell to appease the bond rating agencies.”
A Wall Street Journal report this morning 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.
AT&T is widely recognized as a pioneer in connected devices and services in the United States, of course, and Digital Life has been a natural extension of that effort. But AT&T has made no secret of its ambitions of becoming a major player in the world of digital media and advertising, as the Time Warner deal underscores. So selling off its Digital Life business may not be as surprising as it would initially appear—particularly given the financial magnitude of the Time Warner acquisition.