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AT&T said to explore sale of Digital Life

AT&T may sacrifice its Digital Life business to raise cash as it prepares to purchase Time Warner for more than $85 billion. With consummation of the mega-merger looking increasingly likely, analysts say AT&T may need to convert some of its other businesses into cash in order to maintain its high credit rating.

Digital Life is AT&T’s four-year-old home security business that includes options for smart home features like temperature sensors, smart wall outlets, and connected cameras. All of these can be monitored from a smartphone app. Subscription prices range from $40 per month to $65 per month depending on the features included.

According to Reuters, AT&T is exploring several options for Digital Life, including an outright sale of the company. The unit is thought to be worth roughly $1.0 billion, less than 1% of AT&T’s total debt.

If AT&T is exploring a sale of Digital Life, the motivations may be strategic as well as financial. The smart home business could be one that doesn’t have tremendous synergies with the media production and delivery powerhouse AT&T is trying to build.

While the number of connected homes in the U.S. is growing roughly 31% a year, according to McKinsey, sales of smart home equipment and services are growing at a slower rate, and there are a number of competitors in the market. Amazon, Google and Comcast are all trying to dominate the smart home, and traditional home security companies are also offering sensors and apps.

Digital Life was started within AT&T by Glenn Lurie, the AT&T Mobility CEO who is also credited with bringing the iPhone to the U.S. market as an exclusive AT&T device. Lurie, who is set to leave AT&T next month, is a major advocate for smart home technology, and has said that he uses 165 connected devices in his Atlanta home.

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