Japan's SoftBank Group is prepared to give up control of Sprint to T-Mobile US to clinch a merger of the two U.S. wireless carriers, according to a Reuters report.
SoftBank has not yet approached Deutsche Telekom to discuss any deal because the U.S. Federal Communications Commission has imposed strict anti-collusion rules that ban discussions between rivals during an ongoing auction of airwaves.
After the auction ends in April, the two parties are expected to begin negotiations, Reuters reports.
Two and a half years ago, SoftBank abandoned talks to acquire T-Mobile for Sprint amid opposition from U.S. antitrust regulators. That deal would have seen Deutsche Telekom retain a minority stake in T-Mobile, down from about 65 percent.
SoftBank, which owns about 83 percent of Sprint, has been frustrated with its inability to grow significantly in the United States, where both Sprint and T-Mobile have struggled to compete with Verizon Communications and AT&T.
SoftBank, Sprint, Deutsche Telekom and T-Mobile all declined to comment.
T-Mobile is now almost as big as Deutsche Telekom's German business. Under John Legere, the company has rolled out unlimited data plans and international roaming packages. Combined with aggressive marketing, this has boosted T-Mobile customer base at the expense of its rivals.
While Sprint has also been growing its customer base, it has done so primarily through heavy discounting.
The FCC and the U.S. Department of Justice sent strong messages in 2014 that they did not want Verizon, AT&T, Sprint and T-Mobile to merge among themselves.
Since then, AT&T acquired satellite television provider DirecTV and has signed an agreement to buy media giant Time Warner.