AT&T is closing in on a deal to acquire advertising company AppNexus, as the operator looks to beef up its digital advertising business, and mount a challenge for revenue in the space against leaders Google and Facebook.

The US operator is currently discussing a deal worth $1.6 billion and an agreement is close to being finalised, news website Cheddar reported.

News of the potential acquisition comes just days after AT&T finalised its acquisition of Time Warner. The operator previously stated it would use inventory from the media company’s Turner division to deliver a new targeted advertising platform.

AT&T CEO Randall Stephenson this week told CNBC AT&T was planning a number of additional acquisitions as part of its advertising strategy and there could be some M&A activity around this in the coming weeks.

The Wall Street Journal reported AppNexus is backed by advertising giant WPP, investment company TVC Capital and News Corp. It had filed for an IPO in 2016, but opted to hold off because of the economic climate at the time. The company operates one of the world’s largest online ad exchanges allowing advertisers to buy space and target their respective audiences across thousands of websites.

It raised around $344 million in funding since being founded in 2007 and was valued at around $1.8 billion in 2015.

While AT&T starts to build its digital advertising business, it still has a long way to catch up to the likes of Facebook and Google, which eMarketer predicted will control 57 per cent of the US digital advertising market this year.