German communications giant Deutsche Telekom is in preliminary talks to acquire Sprint Nextel, the No. 3 U.S. mobile carrier, according to published reports, but no formal offer has yet been made.

The talks, rumored to be taking place since March, have intensified, according to Monday’s Wall Street Journal.

The merger of T-Mobile USA, Deutsche Telekom’s U.S. unit, and Sprint Nextel would vault the merged entity into first place among U.S. mobile carriers, ahead of AT&T and Verizon Wireless.

While the number the No. 1 slot has immense competitive advantages, there are technical and regulatory problems that could dampen the German giant’s enthusiasm for the acquisition.

“You would be going from four players with 85 percent market share to three, and you would have a foreign buyer purchasing a very valuable U.S. property,” said Matthew Thornton, telecom analyst at Avian Securities LLC. “Those two things would draw regulatory attention.”

Sprint currently holds just over 20 percent subscriber market share while T-Mobile USA, the No. 4 carrier, has about 11 percent. The merged entity will own nearly 31 percent of the U.S. mobile subscriber base.

No. 1 AT&T would become the second largest in terms of subscriber totals with 28 percent market share, and Verizon Wireless would be third with 27 percent share.

Because Germany is a U.S. ally, the acquisition would not attract the kind of scrutiny perhaps a Chinese firm would draw, he said, but the issue could be a potential obstacle to the merger.

The technical problems would be far more difficult and expensive to solve than the regulatory problems, according to industry experts.

Sprint and T-Mobile have followed divergent technology and frequency paths, so the merged entity will have to manage an alphabet soup of disparate network technologies including GSM, GPRS, CDMA, iDEN, UMTS, and WiMAX.

“When Deutsche Telekom puts this disparity on the table and they add some of the debt issues, it will be difficult for their shareholders to swallow this proposal,” said Joe Nordgaard, director of wireless consulting firm Spectral Advantage.

Despite the obstacles, Mr. Nordgaard believes that Deutsche Telekom should pursue the acquisition because T-Mobile needs to close its growing technology and spectrum gap with AT&T and Verizon.

“In another few years most of the carriers will upgrade to LTE and the technical disparity will be less of an issue, but Deutsche Telekom will have to convince a lot of people of the short term wisdom of the purchase,” Mr. Nordgaard said.