UPDATE 2-Sprint weighs rival bid for MetroPCS-sources

* Sprint may wait until after T-Mobile/MetroPCS deal-source

* Sprint came close to buying MetroPCS in February-sources

* Sprint shares off 4 pct, MetroPCS shares down almost 2 pct

(Adds analyst and lawyer comment, share price update, byline)

By Nadia Damouni and Alexander Hübner

NEW YORK, Oct 4 (Reuters) - Sprint Nextel Corp is considering making a rival bid for MetroPCS Communications Inc , which agreed on Wednesday to a merger with Deutsche Telekom AG's T-Mobile USA, according to sources familiar with the situation.

Sprint is deciding whether to go public with a bid for MetroPCS, or to wait until the T-Mobile USA-MetroPCS deal is complete and then bid for the combined company, one of the sources said on Thursday.

Sprint, the No. 3 U.S. wireless carrier, declined to comment.

In February, Sprint came close to buying MetroPCS, but backed out at the last minute, according to sources familiar with the matter. Sprint's board rejected the $8 billion deal, which would have included debt, just hours before the companies were set to make an announcement, the sources said.

At the time, the board did not want Sprint to spend billions of dollars on a deal when the company needed resources for a costly network upgrade, sources said.

Sprint is spending billions of dollars to increase its wireless data speeds to catch up with bigger rivals AT&T Inc

and Verizon Wireless .

The sources on Thursday said a Sprint-MetroPCS combination in February would have generated savings of $8 billion to $9 billion, much greater than the synergies expected from the deal between T-Mobile USA and MetroPCS. The merger partners said on Wednesday that their deal could generate savings of $6 billion to $7 billion on a net present value basis.

Some analysts are worried that Sprint will be left out of the next round of U.S. market consolidation if it does not make an offer for MetroPCS.

But Pacific Crest analyst Michael Bowen said that while a MetroPCS deal would help Sprint's spectrum position, "it's not a necessary thing."

He estimated that Sprint could pay between $12.50 and $15 per share for MetroPCS by offering its own stock as payment. The T-Mobile offer values MetroPCS at $11.28 per share, according to his calculations.

When Sprint decided against buying MetroPCS in February, Sprint shares were trading at $2 to $3. They have since risen to $5, even after an almost 4 percent decline on Thursday.

"They've got a better currency to look at (MetroPCS) now," said Bowen, adding that the break-up fee of $150 million that MetroPCS would have to pay T-Mobile USA if it instead chose Sprint was not too onerous.

Asked about the idea of Sprint waiting to make a bid until the merger of MetroPCS and T-Mobile USA is complete, Bowen said that was a possibility. The merger partners say they expect the deal to be completed in the 2013 first half.

By the second half of 2013, Bowen said, Sprint would have finished the toughest parts of its network upgrade project and would be in better financial shape to handle a big deal.

The analyst said he would not expect U.S. regulators to oppose a Sprint purchase of a combined T-Mobile USA and MetroPCS.

However, David Smutny, a veteran of the Justice Department who is now at the law firm Orrick, Herrington & Sutcliffe LLP, was not so sure.

"I suspect that nothing would nix a deal between either Sprint and MetroPCS or T-Mobile and MetroPCS," he said. "If there were a deal between the three of them, it's possible that would be a problem overall."

A merger between Sprint and MetroPCS would likely be approved by the Justice Department's antitrust division and the Federal Communications Commission with minimal or no divestitures, said Stephen Axinn, an antitrust expert with the New York law firm Axinn, Veltrop & Harkrider LLP.

MetroPCS shares were down almost percent at $12.04 in afternoon trading on the New York Stock Exchange.

(Additional reporting by Sinead Carew and Diane Bartz; Editing by Paritosh Bansal, Carol Bishopric, Lisa Von Ahn and John Wallace)

((paritosh.bansal@thomsonreuters.com)(+1 646 223 6113)(Reuters Messaging: paritosh.bansal.thomsonreuters.com@reuters.net))