Talks have been on and off, and a deal may not be reached, said the people, who spoke on the condition of anonymity because the talks are private. The companies haven’t been able to agree on the valuation of T-Mobile USA, which reported a drop in profit in the fourth quarter, the people said. Sprint rose 6.7 percent to $4.78 in early U.S. trading, and Deutsche Telekom gained as much as 6.1 percent to 10.22 euros in Frankfurt.

A merger of Sprint and T-Mobile USA would combine the third- and fourth-largest U.S. wireless providers behind Verizon Wireless and AT&T Inc. (T) Sprint’s market value was $13.6 billion as of yesterday’s close. T-Mobile USA may be valued at 16.3 billion euros ($22.6 billion), based on a January estimate by Michael Kovacocy, an analyst at Evolution Securities in London.

“In general, all options are open in the U.S. — the sale of the whole business or of parts,” Deutsche Telekom Chief Financial Officer Timotheus Hoettges said in an e-mailed response today. He said the company could also find a partner, sell shares in the market or form a network agreement.

Bill White, a spokesman for Overland Park, Kansas-based Sprint, declined to comment.

Customer Losses

A tie-up would allow Bonn-based Deutsche Telekom, Europe’s largest phone company, to keep a stake in one its biggest markets while making it easier to finance investments for a faster next-generation network.

T-Mobile, which accounts for about a quarter of Deutsche Telekom’s sales, has lost customers at an accelerated rate as it trailed rivals in building out a third-generation mobile network and missed out on being able to sell Apple Inc.’s iPhone. About 56,000 customers abandoned T-Mobile USA last year, while Sprint, AT&T and Verizon Wireless all boosted their counts.

Talks have included discussion of Deutsche Telekom owning about 50 percent of a combined T-Mobile USA-Sprint, one person said. Sprint had revenue of about $32.6 billion in 2010, while T-Mobile USA recorded revenue of $21.4 billion.

‘Flexibly Positioned’

T-Mobile USA is also discussing buying wireless spectrum fromClearwire Corp. (CLWR) as an alternative to a merger with Sprint, two people said. Deutsche Telekom’s Hoettges said last month that buying U.S. wireless spectrum from Clearwire is only one option for the German phone company. He ruled out an outright sale of T-Mobile in the U.S.

“We’re flexibly positioned,” Hoettges said today, adding that Deutsche Telekom is working on several options. “We’re not under pressure. We want the best solution.”

Sprint is the majority owner of Kirkland, Washington-based Clearwire.

Sprint is also in talks with LightSquared Inc., a wireless startup founded by billionaire Philip Falcone and backed by his Harbinger Capital Partners hedge fund, three people familiar with the talks said last month. LightSquared, which is seeking to sell 4G capacity in the U.S., may strike a deal to use Sprint’s cell sites and equipment to build out its network.

Sprint said in December it is going to spend up to $5 billion over the coming three to five years to upgrade its network to allow it to combine the disparate spectrum bands it uses onto a single type of base station.

To contact the reporters on this story: Serena Saitto in New York at ssaitto@bloomberg.net;Jacqueline Simmons in Paris at jackiem@bloomberg.net; Jeffrey McCracken in New York atjmccracken3@bloomberg.net.

To contact the editor responsible for this story: Jennifer Sondag at jsondag@bloomberg.net

Randy Muench, President of Carriers Division at CFN Services is bringing his experience and expertise to 4GWE event in Miami Florida, February 3, 2011 at 1:50pm

Randy bring a unique perspective on the 4G investment ROI drawing on his experience not on

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