Sprint shares soar on T-Mobile USA tie-up talk

By Nichola Leske and Sinead Carew

FRANKFURT/NEW YORK (Reuters) - Sprint Nextel Corp shares jumped 14 percent on speculation that the No. 3 U.S. mobile service might be bought by Deutsche Telekom even as many analysts said such a deal would be very difficult to pull off.

Together, Sprint and Deutsche Telekom's T-Mobile USA would vault to second place in the U.S. mobile market, where they are each having trouble competing against each other as well as market leader Verizon Wireless and No. 2 AT&T Inc.

But investors were concerned that a Sprint deal would be too costly for Deutsche Telekom and too tough to integrate given their different network technologies. Sprint has a market value of $12 billion and more than $19 billion in liabilities.

Shares of DT, which have a market value of 41 billion euros ($60 billion), closed down 1.15 percent at 9.425 euros and were the sixth biggest loser on Germany's DAX index.

"Despite the potential benefits of a merger we believe combination would also present several challenges," said Piper Jaffray analyst Chris Larsen. "There's no easy deal or no easy road map to a single technology, which is where your synergies come from," he said.

Such a merger would also face a tough review by U.S. antitrust regulators, analysts and regulatory experts said.

Deutsche Telekom and Sprint declined to comment on the merger speculation, which was first reported in Britain's Sunday Telegraph. CNBC reported that Sprint was not aware of any overtures from Deutsche Telekom, citing sources.

Sprint shares rose 50 cents at $4.27 in afternoon trade.