Sprint Nextel Mulls Breakup: Report

Updated from 10:21 a.m. EDT

Shares of Sprint Nextel (S Quote) surged Monday on separate reports it was contemplating the spinoff or sale of its Nextel unit and that Deutsche Telekom (DT Quote) was considering a bid for the wireless carrier.

The Wall Street Journal reported early Monday that a bid for Sprint from Deutsche Telekom was at a preliminary stage and management could walk away before making an offer, according to people close to the situation. Analysts tell TheStreet.com that Deutsche Telekom could bid up to $12 a share for Sprint.

Representatives for Sprint and Deutsche Telekom's T-Mobile unit both said it was company policy not to comment on rumors or speculation.

Meanwhile, a separate report from The Wall Street Journal surfaced just before the closing bell that Nextel's founder Morgan O'Brien was attempting to field a consortium of investors to bid on Sprint's Nextel unit. Sprint is also reportedly considering spinning off the Nextel unit into a separate company, which would undo the $35 billion acquisition from 2005.

Cramer: How to Buy Telecom

Sprint was lately up 98 cents, or 12.4%, to $8.87, while Deutsche Telekom was off 0.9% at $17.95. Rival AT&T (T Quote) was losing 0.5%, and Verizon (VZ Quote) was down 1.5%.

Currently, Deutsche Telekom's T-Mobile unit is the fourth-largest wireless carrier in the U.S., with roughly 28.7 million customers. If Deutsche Telekom were to acquire Sprint, which has a market capitalization of $22 billion and had 53.8 million total subscribers at the end of 2007, it would propel T-Mobile to the top wireless position in the U.S.