Sprint and T-Mobile Merger? You Vote

Updated from 4:43 p.m. ET with closing stock prices.

NEW YORK (TheStreet) -- Sprint (S) is reportedly preparing a bid for competitor T-Mobile (TMUS), in a possible merger of the number three and four wireless carriers by market share in the U.S.

According to the Wall Street Journal, Sprint is preparing a takeover that could be worth in excess of $20 billion, however the telecom hasn't yet decided whether it will unveil a formal offer. A key issue in any prospective deal would be the blessing of the Justice Department, which rejected AT&T's (T) $39 billion takeover attempt of T-Mobile in 2011.

A key calculus in any deal would be Sprint's perception that regulators would tolerate a merger between two of the four nationwide wireless carriers. The DoJ and Federal Communications Commission have blessed smaller-sized takeovers such as AT&T's acquisition of Leap Wireless, Sprint's takeover of Clearwire and T-Mobile's merger with MetroPCS in 2013.

The Justice Department also recently allowed for the merger of U.S. Airways and American Airlines, in a deal that will create the world's largest airline and put a vast majority of the airline industry in the hands of four players.

Sprint, itself, was subject to a takeover battle in 2013 as DISH Network (DISH) sought to outbid SoftBank, a Japanese telecom that now holds majority control of the carrier.

Since then, a combination of Sprint and T-Mobile has been an oft-discussed merger in the consolidating telecom sector. Proxy filings in Sprint's takeover by SoftBank also indicated that the company had been close to a merger agreement with T-Mobile.

John Paulson of hedge fund Paulson & Co., a vocal investor in the telecommunications sector, has also floated the idea of a merger with Sprint and T-Mobile. Paulson currently is a large investor in both firms and has played an important role in many of the sector's biggest deals.

Sprint declined to comment for this story.

A Sprint and T-Mobile merger isn't the only transformational deal currently being speculated in telecom and communications markets. DISH Network has entertained the idea of a merger with DirecTV (DTV) following its failed bid for Sprint. Meanwhile, Charter Communications (CHTR) is reportedly close to submitting a takeover offer for Time Warner Cable (TWC). Comcast (CMCSA) is also a rumored bidder for some or all of Time Warner Cable.

A takeover of T-Mobile, DirecTV or Time Warner Cable would be one of the biggest mergers in recent years, and likely a culmination of consolidation throughout wireless and wireline communications networks in the U.S.

T-Mobile shares gained over 8% in Friday trading on the WSJ's report, while Sprint shares gained over 3%, closing at $8.43 a share.

What do you think is a more likely deal in 2014?

-- Written by Antoine Gara in New York.

If you liked this article you might like

Verizon and Yahoo! Sports Bring Super Bowl LII to the Small Screen

Verizon and Yahoo! Sports Bring Super Bowl LII to the Small Screen

These Stocks Are Showing Resiliency Amid the Market Selloff

These Stocks Are Showing Resiliency Amid the Market Selloff

Stocks Slide and Amazon's Profit Soars - 5 Things You Must Know

Stocks Slide and Amazon's Profit Soars - 5 Things You Must Know

5 High-Growth Tech Stocks for 2018

5 High-Growth Tech Stocks for 2018

Goldman Exec Swindled out of $1.2 Million in Vintage Wine: LIVE MARKETS BLOG

Goldman Exec Swindled out of $1.2 Million in Vintage Wine: LIVE MARKETS BLOG