Sprint could launch a bid as early as the first half of next year, the report said citing people familiar with the matter.
The company is reportedly studying regulatory concerns before moving forward. Placing a bid despite regulators' concerns would be risky, and a bad reaction could put an end to the effort.
A deal between the third- and fourth-largest U.S. carriers could be worth more than $20 billion.
Sprint shares rose 10 percent in after-hours trading, while T-Mobile shares dipped 1.2 percent.
Sprint declined to comment to CNBC.
—CNBC's Ryan Ruggiero contributed to this article.