Sprint Corporation (NYSE:S) is nearing an agreement to acquire T-Mobile US Inc (NYSE:TMUS) that could value the wireless carrier at almost $40 a share, according to a report in The Wall Street Journal.

T-Mobile Sprint Merger

According to Ryan Knutson of The Wall Street Journal, both companies have agreed on the broad outlines of a merger valuing T-Mobile at around $32 billion.

Opposition from regulators

As reported earlier, U.S. Department of Justice officials sounded a warning that Sprint Corporation (NYSE:S)’s acquisition of T-Mobile US Inc (NYSE:TMUS) would meet with ‘intense scrutiny’ and regulatory difficulties. The DOJ was clearly skeptical about a Sprint-T-Mobile combination.

Sprint Corporation (NYSE:S) is the third largest carrier in the states, while T-Mobile US Inc (NYSE:TMUS) ranks fourth. But T-Mobile has been leading the industry in innovation, and the other three majors in the U.S. have found themselves copying the operator’s Uncarrier initiatives. Moreover, the mobile operator also offers the lowest prices among the top four stateside carriers. The Justice Department might not want to see U.S. consumers lose this combination of low prices and consumer friendly ideas.

Citing people familiar with the developments, The Wall Street Journal’s report published Wednesday points out that as part of the deal, T-Mobile US Inc (NYSE:TMUS)’s largest shareholder, Germany’s Deutsche Telecom AG, would retain a stake of 15% to 20% in the new company. The companies are also exploring forming a joint venture to bid together in upcoming auctions of wireless airwaves currently held by television broadcasters.

Deal is still a ways off

Deutsche Telekom, which owns about 67% of T-Mobile US Inc (NYSE:TMUS), was seeking at least $40 a share, while Softbank Corp (TYO:9984) (OTCMKTS:SFTBF) is willing to pay in the upper $30s, and the two sides have bridged the gap, according to people familiar with the developments.

Billionaire Masayoshi Son, the founder of Japan-based Softbank Corp (TYO:9984) (OTCMKTS:SFTBF), which owns 80 percent of Sprint, has been pitching the deal to skeptical regulators as beneficial to consumers in both wireless and Internet service.

According to Dealbook, many hurdles to the deal remain, and any announcement is still a ways off. The two sides have not conducted due diligence on one another, drafted a definitive agreement or arranged financing.

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 US Inc (NYSE:TMUS) if the deal is not consummated.