Softbank Corp (TYO:9984) of Japan declined comment Thursday about a report buy a controlling stake in Sprint Nextel Corp. (NYSE:S), the No. 3 U.S. communications company.

Softbank officials in Japan said media coverage “is based on speculation.”

The deal would be Softbank’s first telecom venture outside of the country following years of expansion in Japan. But the Japanese company controlled by enterpreneur Masayoshi Son was an original funder of Yahoo Inc. (Nasdaq: YHOO), of Sunnyvale, Calif., the No. 3 search engine.

Wire services reported the two companies are talking about a deal worth either 1.5 trillion yen ($19 billion), according to Bloomberg, or one trillion yen, according to Reuters and Dow Jones. The Japanese company, worth about $4.6 billion, is the parent of Softbank Mobile, which had 30.5 million subscribers in September.

Reports said Softbank would seek a two-third interest in Sprint. The move would face regulatory hurdles and other considerations.

In the past, Sprint sold 20 percent stakes to both France Telecom and Deutsche Telekom (Pink: DTEGY) in a failed move to create a multinational carrier. Those interests have been sold.

Both companies are the third largest carriers in their respective countries. Sprint, based in Overland Park, Kan., with a market cap of $15.1 billion, reported 56 million customers in its last quarterly earnings report.

Sprint, though, hasn't reported a quarterly profit in two years and also incurred heavy costs, as high as $25 billion, to carry the iPhone from Apple Inc. (Nasdaq: AAPL), last year. It was the last of the major carriers to carry Apple's iPhone 4S.

Sprint shares rose 16 percent to $5.84 in pre-market trading. Softbank shares fell 1percent to 2,881 yen ($36.90).

In 2006, Softbank Corp. bought the Japan unit of British mobile phone company Vodafone for $15 billion, a leveraged-buyout deal in cooperation with Yahoo Japan Corp. that established the company as a major player in the country’s mobile services sector. The company started as a software distributor and is involved in mobile and broadband networks and internet phone and advertising.

For its part, Sprint has been limping back from a failed merger with Nextel in 2006 that required massive reworking of the two companies’ incompatible networks. The company has seen its revenue and stock price decline precipitously since the deal.

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