AT&T has agreed to acquire ad tech firm AppNexus in a deal that could reportedly be worth around $1.6bn. The deal, which was heavily rumoured last week, could see AT&T become a substantial challenge to Google and Facebook in the digital ad space.

With the acquisition, AT&T will look to strengthen its advertising platform, with AppNexus becoming part of advertising & analytics at the telecoms and TV giant. According to AT&T, AppNexus’ team will bring “leadership and vertical expertise in machine learning and predictive analytics, advertising technology and video”.

“Ad tech unites real-time analytics and technology with our premium TV and video content,” said Brian Lesser, AT&T advertising & analytics CEO. “So, we went out and found the strongest player in the space. AppNexus has scale of infrastructure, advanced technology and diverse talent. The combination of AT&T advertising & analytics and AppNexus will help deliver a world-class advertising platform that provides brands and publishers a new and innovative way to reach consumers in the marketplace today.”

AppNexus’ technology will be integrated across AT&T advertising & analytics, finding a home within the company’s first-party data, premium video content and distribution. Bringing in AppNexus will also expand AT&T’s advertising footprint into Europe, APAC, and LATAM.

The transaction is expected to close during the third quarter of 2018, supposing all necessary conditions are met. Until then, both companies will continue to operate independently.

“Innovation is core to the heritage of both AT&T and AppNexus, and we have an exciting opportunity to chart the future course of advertising together,” said Brian O’Kelley, AppNexus CEO. “Combining AT&T’s incredible assets with our technology, we will help brands and marketers power new advertising experiences for consumers. It’s what the market is asking for, and together we’re poised to deliver it.”