AT&T’s mysterious MSSP spinoff could have upsides for its security consulting business

Telecom giant AT&T’s move to say adieu to a significant wing of its managed security services provider unit is essentially a bid to allow the team’s consulting services to grow, according to industry analysts.

The newly independent group, announced by AT&T last week, will become part of a new company co-owned by AT&T and venture capital firm WillJam. WillJam is the brainchild of Bob McCullen, a former executive chair of multiple cybersecurity service firms, including VikingCloud and GoSecure, and the founder of several other managed security companies, including Exault and Ambrion.

“Our direct focus remains on unlocking the power of our best-in-class connectivity with embedded security features that will allow our network to intelligently protect customers end-to-end,” according to Rick Welday, head of AT&T Enterprise Markets, in a news release. “We’re energized about this new business model and the opportunities and capabilities these network enhancements will bring to the market.”

The deal will see the new unit retain “select” security software products, operational security teams and security consulting resources, according to AT&T.

Beyond what was said in the announcement, AT&T has offered virtually no details about the new business, but sources say that the joint venture — codenamed “Knight” — will focus on allowing the security consulting team to grow more freely.

The company, according to Roger Entner, an analyst at Recon Analytics, has been selling a managed security suite for years, having adapted the technology from its acquisition of AlienVault in 2019 and rebranded it as “AT&T Cybersecurity.”

The new entity, whose real name was not disclosed by AT&T, will take over most of the consultancy business from AT&T, according to Entner.

“[MSSPs have] a very consultative sales approach,” he said. “And telecom providers are a lot of things, but they’re not consultants — but the customers want it, the customers need it, and they’re looking for one-stop shopping.”

The key decision point for AT&T, said Gartner Research vice president Lawrence Pingree, seems to be organizational. Having the consulting business be a part of a huge entity like AT&T means that it has to compete for budget in marketing, R&D and everything else with all the other parts of the telecom giant.

“Basically, this allows them to be more agile, and evolve their portfolio more toward today’s kind of technology and enhance the budgeting of marketing,” he said.

AT&T, added Pingree, doesn’t necessarily have one of the biggest names in managed security services. The average consumer, he said, might not have any idea that it’s one of the company’s business areas.

“The independence will allow them to evolve faster,” he said. “I don’t think they’ve severed their relationships, I think it broadens their horizons.”

AT&T said the company will have more to share in the coming weeks, and that the transaction is expected to close in the first quarter of 2024.

Managed Service Providers, Network Security

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