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Sprint Corp. (S - Analyst Report) is reportedly nearing an agreement to acquireT-Mobile US Inc. (TMUS - Snapshot Report). According to Bloomberg, the company is expected to pay around $40 a share to acquire T-Mobile US, which represents a total valuation of $31 billion.

We believe the prospective deal should bring meaningful synergies to Sprint and help stabilize its financials and market share in the wireless industry.

Sprint plans a stock-and-cash deal split equally for T-Mobile US. Alongside, it also seeks to offer a 15% stake holding in the combined company to Deutsche Telekom AG – parent company of T-Mobile US, which currently holds a 67% stake in the latter. Although nothing has been officially announced as yet, the deal is reportedly expected to take place as early as July this year.

For Sprint, the merger with T-Mobile US implies a gain of over 100 million customers. The deal will also place its parent company, SoftBank in a much stronger position as opposed to major carriers such as Verizon Communications Inc. (VZ - Analyst Report) and AT&T Inc. (T - Analyst Report).

The merger will give birth to a new entity that will likely be the second largest carrier in the world in terms of revenues, surpassing global giant Vodafone Group . It will also give the Japanese carrier, Softbank a shot in the arm, with a solid foothold in the world’s largest economy.

However, Sprint’s ambitious plan has raised quite a few eyebrows in the U.S. telecom industry’s regulatory body. According to previous reports, antitrust officials at the U.S. Department of Justice have expressed their contempt toward the T-Mobile and Sprint merger.

As a result, we believe skepticism on the part of the regulators is the biggest hurdle that Sprint needs to overcome in the coming days, in order to make this deal a success.

Sprint currently has a Zacks Rank #3 (Hold).

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