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By Rujun Shen and Rachel Armstrong
SINGAPORE, June 11 (Reuters) - Singapore Telecommunications Ltd, Southeast Asia's largest telecommunications operator, said on Wednesday it would buy two digital advertisers for a total of $359 million, eager to achieve profitability for the business through expansion.
The move follows purchases of digital marketing firm Amobee, Inc. in 2012, which in turn bought mobile advertising and marketing platform developer Grandient X Inc. last year, as the global mobile advertising market takes off with surging use of smart phones.
"We believe that in order to take Amobee to the next level in this space we needed to make a transformative acquisition that would allow the company to increase its scale, its scope," said Allen Lew, chief executive officer for Group Digital L!fe of SingTel and chairman of Amobee.
"The big opportunity for us is in the emerging markets where the fixed Internet has very low penetration and the mobile Internet is going to change the game."
Amobee, now a wholly-owned subsidiary of SingTel, agreed to acquire the entire stake of Adconion Direct North America and Adconion Australia for $209 million, and Kontera Technologies, Inc., for $150 million, SingTel said in a statement.
SingTel will also provide up to $20 million and $5.8 million respectively, to each company to retain key staff. The transactions are subject to fulfilments of certain conditions, SingTel said.
In the financial year ended March 31, revenue from mobile advertising, mainly from Amobee, more than doubled on the year to S$113 million ($90.42 million), contributing to the bulk of revenue growth in SingTel's digital business.
Lew said he expects Amobee's revenue to exceed $300 million after the acquisitions.
Amobee is running at a loss, and expansion is key for the company to reach profitability. Growth units like Amobee is expected to start contributing to the bottom line in three to five years, he added.
Adconion has operations primarily in the United States and Australia, and reported a revenue of $185 million for the 2013 financial year.
U.S.-based Kontera Inc, a digital content intelligence and marketing technology company, reported a revenue of $26 million for the 2013 financial year. ($1 = 1.2497 Singapore Dollars) (Editing by Subhranshu Sahu)