(REUTERS) -- AT&T is in talks with Leap Wireless International about a potential sale of some assets to the smaller operator in a last ditch effort to gain regulatory approval for AT&T's proposed T-Mobile USA purchase, according to a New York Times report.
The report, which cites unnamed people involved in the talks, said the deal being discussed by AT&T and Leap would make Leap the No. 4 U.S. mobile service while allowing AT&T to keep enough T-Mobile USA assets to support its high-speed service.
It follows AT&T's announcement on November 24 that the No. 2 U.S. mobile service was withdrawing its application with the U.S. Federal Communications Commission for approval of the proposed $39 billion acquisition of T-Mobile USA from Deutsche Telekom AG.
The FCC dealt AT&T a blow last week when it sought to have the deal sent to an administrative law judge as it had concluded that the transaction would diminish competition and lead to job cuts.
The U.S. Department of Justice sued to block the deal in late August.
AT&T declined comment. Leap was not immediately available for comment.