US private equity group Apollo Global Management has agreed to acquire Yahoo and the other media assets of Verizon Communications for $5bn, as the telecoms group shifts its focus to its core network businesses and rolling out 5G wireless technology.

Apollo, which has been on a buying spree in recent months, is convinced that it can do a better job than Verizon in transforming the new company into a strong digital media and advertising technology player as more ad dollars shift online.

“We are big believers in the growth prospects of Yahoo and the macro tailwinds driving growth in digital media, advertising technology and consumer internet platforms,” said David Sambur, co-head of private equity at Apollo.

As part of the deal, Verizon will retain a 10 per cent stake in the new media company, which will be named Yahoo. The sale marks a dramatic about-face for the US wireless operator, which between 2015 and 2017 spent about $9bn to acquire Yahoo and AOL as the anchor properties of an online media division that became known as Oath.

The strategy reflected a mindset that was once widely shared among the world’s biggest telecoms companies, which sought to benefit from an explosion in digital media consumption by becoming owners of content rather than mere network operators, or “dumb pipes”.

Netflix and Amazon have built huge online media businesses to serve consumers’ appetite for on-demand video, while media companies such as Disney and ViacomCBS have raced to adapt their businesses to consumers’ shifting habits by building streaming platforms of their own.

But telecoms companies have on the whole struggled to establish themselves as creators and owners of the programming distributed over their cellular networks and wires.

Verizon’s struggles are not unique. Its larger rival AT&T acquired Time Warner, the owner of CNN, HBO and Warner Brothers, for $85.4bn about five years ago to build a streaming business capable of taking on Netflix.

The strategy has so far had mixed success. AT&T took a $15.5bn charge on its pay-TV business in January, as customers switched to streaming platforms from cable and satellite.

Verizon also hoped to create a content and marketing platform that would allow it to compete with Google and Facebook. However, it failed to win significant market share from its rivals, forcing it to reconsider the broader strategy.

Talking about the sale, Hans Vestberg, chief executive of Verizon, said Apollo would provide the necessary resources and investment for Yahoo to grow. “During the strategic review process, Apollo delivered the strongest vision and strategy for the next phase of Verizon Media. I have full confidence that Yahoo will take off in its new home.”

Verizon incurred a $4.6bn writedown on its media businesses during 2018, after the brands “experienced increased competitive and market pressures . . . that resulted in lower than expected revenues and earnings”, the company said in a filing.

“Those pressures were expected to continue and have resulted in a loss of market positioning to our competitors in the digital advertising business,” the filing added.

Verizon also “achieved lower than expected benefits from the integration of . . . Yahoo and AOL”, it said.

The sale of the media assets further underscores Verizon’s decision to focus on expanding its 5G internet services, which covered 230m people in more than 2,700 cities as of December last year.