AT&T finally answered the nagging question regarding the future of its cybersecurity organisation by announcing plans to spin out that group in early 2024At least in the near term, AT&T will hold a majority in the fledging company with Chicago-based investment house WillJam Ventures also taking a stake. The Chicago-based investment firm has a history in cybersecurity.  The company currently has a stake in the PCI compliance vendor Viking Cloud, as well as XDR provider GoSecure. WillJam facilitated the deal to sell TrustWave to SingTel for $850m in 2015.

For months, rumours have been swirling that AT&T was shopping its cybersecurity unit. AT&T stayed quiet on the topic until last week. The company will keep a majority ownership stake in the standalone company with a new investment from WillJam Ventures. The announcement offered minimal details, other than the new entity will include security software and managed and consultative security services. AT&T has refused to answer questions beyond the concise announcement, other than to say it is communicating with its customers about the transition.

This is not the first time AT&T has hit a rough patch concerning its cybersecurity business. In 2018, AT&T acquired threat intelligence vendor AlienVault, forming a new unit around the company. AlienVault had a very different go-to-market approach than AT&T, focusing on delivering security services to mostly mid-sized and smaller customers through the channel. AT&T traditionally sold security services directly, with a big emphasis on large enterprise clients. There were some indications that the integration wasn’t an entirely seamless process as AT&T moved to sell a higher proportion of security services through resellers. In security, AT&T started to drop off the radar.

Given AT&T’s speckled past in security and the fairly active discussion around a possible sale, the decision to jettison its cybersecurity unit is hardly surprising. But that doesn’t mean it isn’t questionable. Security is core to effective network communications; so shedding an organisation that, for years, AT&T has touted as providing it with differentiating capabilities could alarm and confuse clients and partners alike. Clear communications around how this will benefit clients, rather than its investors, will be paramount. Clarity around financials would also help clarify the motivation behind the arrangement.

Whatever comes of this spinout, at least initially it looks like a lack of commitment from AT&T to security.  And the timing is odd as cybersecurity remains a top investment priority for most businesses.

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