AT&T is considering selling Digital Life due to its planned merger with Time Warner which is set to cost the company $85.4 billion, sources close to the Dallas, Texas-based wireless carrier revealed on Friday. The division that the firm founded in 2012 started offering home security systems for private households and businesses in 2013 and was meant to help the telecom giant diversify its portfolio and consequently make its revenue stream less reliant on the wireless segment which has been showing signs of saturation in recent times. As suggested by AT&T's consolidated financial report for its 2016 fiscal year, Digital Life didn't contribute much to its annual revenue which amounted to just under $164 billion, yet the unit is still said to be sustainable and believed to service at least 400,000 customers, making it an attractive acquisition target for a number of companies.
According to sources familiar with the company's operations, the sale of AT&T Digital Life could raise around $1 billion and may lead to more similar deals in the near future. Industry watchers believe that while AT&T can hardly fund the Time Warner acquisition by selling its small units it doesn't deem crucial, the company may still have to do so to maintain its bond rating due to the fact that its potential consolidation is expected to see it incur massive debt which won't combine well with its falling revenue. The second largest mobile service provider in the United States reported a debt of over $143 billion for the second quarter of the year, though it's unlikely that the sale of Digital Life would significantly reduce that figure seeing how its home security business isn't too leveraged.
If AT&T is truly adamant to offload Digital Life, it may do so by early 2018 given how it previously said that the Time Warner deal should be concluded by the end of the year. Recent reports are in line with that prediction, with sources close to the U.S. Department of Justice claiming that the federal agency just reached the final stage of its investigation into the proposed consolidation. If the transaction is cleared by the DOJ, it's unlikely that any other branch of the government will stand in the way of AT&T's merger ambitions.