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.