No sooner did we learn that Texas-based no-contract carrier MetroPCS Communications is in talks to merge with Deutsche Telekom AG-owned T-Mobile, than third-place carrier Sprint Nextel let it be known that it just might have a counterbid.

T-Mobile, of course, was set to be acquired by AT&T in a high-profile, multibillion-dollar merger deal last year that would have created perhaps the biggest wireless carrier in the nation, surpassing Verizon Wireless.

Stopped Cold

But federal regulators had other plans, putting the kibosh on the deal on grounds that it would have too much of a drastic impact on competition and result in higher prices.

On Thursday Bloomberg News, citing unnamed sources, said Overland Park, Kansas-based Sprint Nextel was in the process of formulating the counteroffer and would decide by next week whether to proceed.

That news sent shares of Sprint tumbling, The New York Times said, while MetroPCS shares rebounded in early trading on news of the proposed merger.

"A marriage of the fourth- and fifth-largest U.S. carriers is a big deal and a higher competitive threat to Sprint, as it could make T-Mobile as formidable and closer to Sprint in terms of [subscribers]," said Neil Shah, a senior global wireless practice analyst at Strategy Analytics.

He added that it's important for Sprint to head off this threat.

"T-Mobile acquiring MetroPCS will also improve its subscriber mix in terms of postpaid vs. prepaid similar to Sprint," Shah told us. "For Sprint this means a lost opportunity to its nearest competitor, and hence the carrier will try to woo away MetroPCS from T-Mobile in every possible way."

In any wireless merger, the issue is perhaps less about gaining subscribers as gaining crucial wireless spectrum to allow building out mobile networks to keep up with rising demand, especially for surging data from smartphones using long-term evolution 4G speed.

T-Mobile would benefit from spectrum from MetroPCS in constrained markets, and their combined position would allow for 20x20 megahertz LTE deployments in many markets, according to Strategy Analytics.

Less Federal Scrutiny Seen

The merger plans announced Oct. 3 by MetroPCS and Deutsche Telekom AG call for a $1.5 billion payment to MetroPCS, with the deal closing in the first half of next year, and the new company maintaining the T-Mobile name.

Shah said the merger would not attract the same regulatory scrutiny that killed the AT&T deal.

"The Department of Justice calculates using a simple formula called Herfindahl-Hirschman Index as a measure of market concentration," he said. "The TMo-Metro merger...doesn't off-balance the market-concentration levels in terms of significant shift in the resulting market share or market power.

However, in sub-markets T-Mobile may have to swap some assets to weaker competition to win approval, he said.