The biggest story on the financial markets today has been the rumored merger between Sprint Nextel Corporation (NYSE:S) and the Japanese firm, Softbank. The news defined much of the traffic on stock exchanges in the early part of the day.

Early this morning, before the markets opened, Softbank announced that they were in “advanced talks” with Sprint. As the price of shares in both Sprint Nextel Corporation (NYSE:S), and Clearwire Corporation (NASDAQ:CLWR) rocketed upward, we questioned the riskiness of investing in the hope of a deal.

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Sprint Nextel Corporation (NYSE:S) has now confirmed the talks, according to the New York Times’ Dealbook. According to that article, a source who was briefed on the matter, described the deal as a complex one, in which Softbank would acquire 75% of Sprint Nextel Corporation (NYSE:S).

The same source warned that the deal had not been confirmed, and was still being negotiated. The warning included a caveat that the deal may not come to fruition. Sprint maintained that stance in a statement this afternoon.

“Although there can be no assurances that these discussions will result in any transaction, or on what terms any transaction may occur, such a transaction could involve a change of control of Sprint. Sprint does not intend to comment further unless, and until, an agreement is reached.”

One of the benefits of the deal, touted in analysts opinions, is the financial backing Sprint Nextel Corporation (NYSE:S) might gain. This would help the company, and it’s partially owned partner, Clearwire Corporation (NASDAQ:CLWR), spend more money building next generation wireless networks.

Sprint has lagged behind its rivals in establishing an extensive fourth generation wireless data service. The firm’s prospects have looked increasingly poor in recent months, as progress lagged behind and Clearwire corporation (NASDAQ:CLWR) ran into regulatory trouble.

Shares in Sprint rose as high as $6 today, a rise of 18% on yesterday’s close, but trading fell off in the afternoon. The firm’s shares now sit at 5.70, or up just over 13%. Shares in Clearwire Corporation (NASDAQ:CLWR) have resisted downward pressure and remain above $2, or up over 50%, at time of writing.

Sprint Nextel Corporation (NYSE:S) seemed unlikely to have a quick recovery before this morning’s announcement. The company has reported losses for several years running, under the burden of heavy competition, huge capital investment, and a large debt burden of over $20 billion.

Clearwire Corporation (NASDAQ:CLWR) seemed as unlikely to recover. Sprint owns 49% of the company’s stock, and is partnered heavily with the company for next generation wireless network deployment. The firm’s shares have sunk steadily in value since the financial crisis.

Some analysts have pointed to the different business models employed by carriers in Asian countries, and speculated that the strategies could form part of Sprint’s future, should a deal go through.

According to Chetan Sharma, quoted in the Dealbook article, “Things that Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL) are trying to do here, operators are doing in those countries.” Softbank is involved in the development of mobile payments and advertising technologies.

If Mr. Sharma is correct, the mobile landscape in the United States could change drastically. Sprint Nextel Corporation (NYSE:S) might place itself in direct competition with mobile services companies, as well as mobile carriers.

That would be an interesting change in the direction of the American carrier market. Since the dawn of the smartphone era, companies like Apple Inc. (NASDAQ:AAPL) have forced American carriers to put huge subsidies on phone sales. Sprint Nextel, if a Softbank Deal goes through, might try to change the structure of the market.

All speculation aside, Sprint Nextel Corporation (NYSE:S) is in talks with Softbank to merge the companies, or partner them in a financial way. Shares in both Sprint and Clearwire have risen dramatically on the news, though caution seems to be setting in. No deal has been made yet. Risk adverse investors will have to wait and see.