Sprint Corporation (NYSE:S), the third largest wireless carrier in the United States is close to finalizing its agreement to takeover its smaller competitor, T-Mobile US Inc (NYSE:TMUS), according to report from Bloomberg based on information from people familiar with the situation.

According to sources, Sprint Corporation (NYSE:S), which is owned by Softbank Softbank Corp (TYO: 9984) headed by Japanese billionaire Masayoshi Son is near towards agreeing on the price, capital structure, and termination fee of its agreement with T-Mobile US Inc (NYSE:TMUS).

The third largest wireless carrier is proposing to acquire its smaller rival for about $40 per share (50% cash and 50% stock) transaction. The deal would leave Deutsche Telekom AG (ETR:DTE), the parent company of T-Mobile US Inc (NYSE:TMUS) a 15% stake in the combined company, according to the sources who requested anonymity because of the private nature of the negotiations between the companies.

The proposed acquisition price could value T-Mobile at $31 billion. The fourth largest wireless carrier has around $14.5 billion of debt and $5.5 billion of cash, thus its estimated enterprise value is approximately $40 billion.

Deutsche Telekom AG (ETR:DTE) owns 67% of T-Mobile US Inc (NYSE:TMUS), and it is demanding an acquisition price of at least $40 per share. T-Mobile’s stock closed at $34.28 per share and went up by more 1% to $34.75 a share during the extended hours trading on Wednesday.

The sources said Softbank Corp (TYO: 9984) is willing to pay in the upper $30s, but both parties managed to compromise on the difference. According to them, both parties still need to negotiate on other provisions such as the management of the combined company before the completion of the final agreement.

Both parties are also close to agreeing on a reverse termination fee. According to the people, Son is willing to pay around $1 billion. Earlier this month, some sources said the management of Deutsche Telekom AG (ETR:DTE) is demanding about $3 billion.

The people said one of the important factors that Sprint and T-Mobile will still have to work on is developing a model that would project the future of the wireless carriers as a combined or independent company. The forecasts will be the key to convincing regulators that the merger is in the best interest of consumers and to obtaining approval.

The Department of Justice and The Federal Communications Commission (FCC) emphasized its strict stand on mergers. The regulators stated their intention to thoroughly scrutinize a merger between Sprint and T-Mobile. An agreement will likely be announced by August, but earlier reports speculated that it will be this June or next month.