The $26 billion deal could be announced as soon as Sunday, said the people, who asked not to be named because the negotiations are private. No deal has been signed and talks could still fall apart, said the people. The sides have agreed on an exact exchange ratio, although that figure couldn't immediately be determined.
SoftBank, which owns about 85 percent of Sprint, will allow Deutsche Telekom, which owns almost two-thirds of T-Mobile, to consolidate the new company's earnings, said the people.
A deal, if reached, would conclude several years of negotiations between the companies. Talks most recently broke off late last year after SoftBank CEO Masayoshi Son decided he didn't want to lose control of a combined company.
Several things changed over the last few months that led Son to change his mind, including greater synergies from lower corporate taxes, an increased understanding of how much 5G deployment will cost Sprint, and a rapidly changing competitive wireless landscape that now includes cable providers, the people said. Last week, Comcast and Charter, the two largest U.S. cable companies, announced an extended partnership agreement that will allow each company to develop products and services.
A deal announcement doesn't mean a merger will actually happen. Combining the third- and fourth-largest wireless U.S. providers in a market with only four participants -- Verizon, AT&T, T-Mobile and Sprint -- could be a hard sell for U.S. regulators. AT&T attempted to buy T-Mobile in 2011, only to have regulators block it on anti-competitive grounds.
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