However, the story, which cited unnamed people familiar with the matter, said the talks were not advanced and were a plan the companies have on the back burner.
But since the companies are facing regulatory opposition to the deal, it is a plan they are likely to take a closer look at, the people said, according to the report.
AT&T representatives were not immediately available to comment on the story. Deutsche Telekom spokesman Philipp Kornstaedt said the German company was still completely focused on winning approval for the proposed acquisition.
There is no Plan B, he said, reiterating previous comments from Deutsche Telekom. Representatives for AT&T were not immediately available.
Whether or not a joint venture would be approved by antitrust enforcers would depend on how such a venture is structured, a source familiar with the matter told Reuters.
If they want to share networks, there are lot of ways to do that without raising antitrust issues, but the devil is in the details, said the source, declining to be further identified.
In the event that the companies win approval for the deal on condition that they divest some assets, Deutsche Telekom has communicated to AT&T that it could provide a few billion dollars of financing for a buyer of any related divestitures, two sources familiar with the matter told Reuters.
Some analysts have questioned whether AT&T will be able to find a buyers for asset divestitures to please regulators.
The Journal quoted sources as saying that AT&T is expected to make an informal proposal to the U.S. Department of Justice about divestitures in coming days.
The DOJ sued to block the deal in August due to concerns it would harm competition and that case is due to go to trial in February. AT&T last week said it would withdraw its deal application with the U.S. Federal Communications Commission so it could first focus on the antitrust case.
Some antitrust experts were skeptical that a joint venture by such gigantic competitors would be viewed by the Justice Department as markedly different than a merger.
It depends on what the specifics of the joint venture are. If AT&T calls the shots, then there's a problem, said Robert Doyle of the law firm Doyle, Barlow and Mazard PLLC.
If the purpose of the joint venture is to somehow satisfy capacity constraints, it's hard to think how it could be structured to satisfy antitrust concerns, he added.
Some analysts have said however, that it could make sense for the companies to work on a different type of deal such as a network sharing agreement if their merger efforts fail.
(Reporting by Sinead Carew, Nicola Leske and Nadia Damouni in New York, Jeremy Pelofsky in Washington DC; Editing by Gary Hill and Tim Dobbyn)