The nation's third- and fourth-largest wireless phone operators reportedly have agreed on the terms of a deal to join forces.
Sprint and T-Mobile have talked about a combination for years but continued to put it off, each preoccupied with other deals and concerned about scrutiny from antitrust regulators.
But in recent days, the two sides have settled on the terms of a $32 billion deal that is likely to be announced this summer, people briefed on the matter said Wednesday.
Under the terms of the deal, which are still rough, Sprint would acquire T-Mobile for about $40 a share in cash and stock, a 17 percent premium to Wednesday's price, the people said.
Talks are continuing and could still fall apart. But the agreement on terms represents a turning point in a relationship between two companies that have long contemplated a merger.
Sprint and T-Mobile have decided to press ahead because their two main rivals, Verizon and AT&T, each with more than 100 million subscribers, continue to grow more formidable.
Verizon's balance sheet is stronger, after agreeing to take full control of Verizon Wireless last year in a $130 billion deal with Vodafone. Verizon is the largest wireless operator in the country and also provides landlines, cable television and business services.
AT&T, the second-largest wireless provider, recently agreed to acquire DirecTV in a $49 billion deal, which would give it control of the country's largest satellite television operator.
The cable industry also is consolidating. Comcast and Time Warner Cable have agreed on a $45.2 billion deal that would create by far the largest cable-television operator. The combined company also would have strong landline, Internet and business-services offerings.
Together, these mergers and acquisitions by competitors of Sprint and T-Mobile have created a landscape that has increasingly marginalized the two smaller companies, which each has about 50 million subscribers and provides only wireless service.
Sprint and T-Mobile are majority owned by large, international telecommunications groups. T-Mobile is 67 percent owned by Deutsche Telekom of Germany. Last year, T-Mobile merged with MetroPCS, gaining a publicly traded stock that eased the path for a Sprint deal.
Sprint, meanwhile, is majority owned by SoftBank, a Japanese group controlled by billionaire Masayoshi Son.
Son, an entrepreneur sometimes known as Masa who has already reshaped Japan's wireless industry, has made no secret of his ambitions to do the same in the United States. Taking control of Sprint last year was his first step, and at the time that deal was announced, he acknowledged his desire to acquire T-Mobile as well, giving him the scale he thinks he needs to compete with Verizon and AT&T.
Any deal to combine Sprint and T-Mobile likely would face regulatory scrutiny. Antitrust officials at the Justice Department already are considering the implications of Comcast's proposed acquisition of Time Warner Cable, and AT&T's proposed deal for DirecTV. This would add a third megadeal to the mix, and the regulators could consider the merits of all the deals at once.
AT&T attempted to buy T-Mobile three years ago in a deal that also would have consolidated the industry. But regulators effectively killed the deal, saying it would have been bad for consumers because it would have reduced their choices.
Accounting for the regulatory uncertainty, the early terms of the deal include a breakup fee of more than $1 billion that Sprint would pay T-Mobile if the deal is not consummated, the people familiar with the talks said.
A Section on 06/05/2014