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Sprint is enticing prospective LG G4 buyers with a slew of freebies and various payment plans. Reuters

Softbank Corp. (TYO: 9984) of Japan declined comment Thursday about reports it will acquire 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.” But Sprint finally acknowledged it was "in discussions" with the Japanese company about "a substantial investment" in the company.

Sprint has been struggling to tie its nationwide network together and is trailing in mobile services against its competitors , the Verizon Wireless unit of Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE:T). It could reap benefits from some outside help and access to SoftBank’s resources to improve its services.

Sprint offers its wireless services under the Sprint, Boost Mobile, Virgin Mobile, payLo, and Assurance Wireless brands. The sooner it can build up its new and improved network, the better positioned it would be to take market share from its rivals.

Investors agree. Sprint's stock price rocketed nearly 20 percent to $5.95 before closing at $5.78, up 14 percent, in Thursday trading. Sprint shares had fallen 76 percent since 2007. Softbank shares fell 1 percent to 2,881 yen ($36.90).

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 1 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. Deutsche Telekom, though, seeks to acquire control of MetroPCS Communications, the No. 5 U.S. mobile carrier, and inject its wholly owned unit, T-Mobile USA, into a new and bigger company.

Indeed, analysts suggested that Sprint itself might react to that bid by mounting a counter-offer for MetroPCS, of Richardson, Tex. Sprint CEO Dan Hesse acknowledged he'd approached MetroPCS in the first quarter of 2012.

Both companies are the third-largest carriers in their respective countries. Sprint, based in Overland Park, Kan., with a market cap of $17.2 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.

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, Internet phones and advertising.

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