Sprint could make a bid for its rival in the first half of next year, according to the Wall Street Journal, which cited unnamed sources familiar with the matter.
The paper said a deal could be worth more than $20 billion.
A bid probably would face regulatory hurdles, as a merger would further consolidate an industry ruled by a small handful of wireless giants. Verizon Wireless is the country's biggest wireless company, followed by AT&T.
“If Sprint does acquire T-Mobile, it would transform them into a larger and stronger No. 3 competitor to both AT&T Mobility and Verizon Wireless virtually overnight," technology analyst Jeff Kagan said in a note to investors. “Whether the U.S. government would allow it is the question.”
Two years ago, AT&T's bid for T-Mobile was called off after running into opposition from the Department of Justice and the Federal Communications Commission, which opposed the deal on the grounds that it would create a less competitive wireless industry and potentially lead to higher prices for consumers.
A Sprint spokeswoman, responding to a request for comment from The Times, said the company doesn't comment on "rumor and speculation."
Earlier this year, Sprint shareholders approved a $21.6-billion deal to sell a majority stake in the wireless carrier to Japanese telecom giant SoftBank.