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Two giants overwhelmingly dominate the wireless market in the United States. Now a merger deal is in the works that could produce a robust challenger.

Sprint Nextel said Thursday that it was in discussions with SoftBank over a “potential substantial investment.” The talks, which began this summer, center on SoftBank, a Japanese telecommunications company, paying $12.5 billion for a stake of about 70 percent in Sprint, according to a person briefed on the matter who was not authorized to speak publicly. The talks emerged just a week after Deutsche Telekom, the parent of T-Mobile USA, announced a reverse takeover of another smaller company in cellphone service, MetroPCS. The spate of deal-making is aimed at shifting the balance of power in a United States market largely controlled by Verizon Wireless and AT&T. They have more than 200 million customers — more than their next six competitors combined.

As the No. 3 cellphone service provider, Sprint, with more than 56 million subscribers, has long struggled to catch up. In recent years, it has sought to compete primarily on price. But the T-Mobile-MetroPCS merger could create a tougher competitor in the lower end of the cellphone market.

While Sprint has committed billions of dollars to revamping its infrastructure, hoping to develop a Long Term Evolution high-speed network, it has been constrained by limited financial resources. Sprint carried nearly $21 billion in long-term debt as of June 30, and it has lost money every year since 2007.

A deal with SoftBank would promise to provide Sprint with substantial financial power. SoftBank, one of Japan’s largest cellphone service providers, could supply additional resources for Sprint to develop its next-generation network.

The combined company could subsequently consider other deals, possibly including a takeover of Clearwire, a wireless services provider of which Sprint owns a significant stake. Shares of Clearwire jumped nearly 71 percent Thursday on that prospect. And a stronger Sprint could make a run at a merged MetroPCS-T-Mobile. Sprint nearly acquired MetroPCS this year, but its board vetoed the deal as too expensive.

The person briefed on the matter said Thursday that SoftBank and Sprint are focused on their own deal now.

Buying Sprint would give SoftBank an entry into the American market, one of the largest and most profitable in the world.

Chetan Sharma, an independent telecommunications analyst, said a deal between Sprint and SoftBank would probably give SoftBank control over the broad direction of Sprint. SoftBank could influence how Sprint deploys network upgrades or adds services for customers, he said. But a deal would not necessarily accelerate Sprint’s deployment of L.T.E., the fourth-generation cellular network, because Sprint is already on track to expand its newer network aggressively by the end of 2013, Mr. Sharma said.

The more likely result that Sprint customers can expect is new services. Japanese and South Korean carriers are leading the way with innovative mobile services, he said, including mobile payments and analytics that look at a customer’s personal data to provide better map directions or recommendations for things to buy. Such services could open doors to new methods of mobile advertising for Sprint, he said.

“Things that Google and Apple are trying to do here, operators are doing in those countries,” Mr. Sharma said.

A representative of SoftBank was not available for comment.

With a brief statement on Thursday, Sprint confirmed the talks, which had been reported by the Nikkei newspaper of Japan. “Although there can be no assurances that these discussions will result in any transaction or on what terms any transaction may occur, such a transaction could involve a change of control of Sprint,” the statement said.

Shares of Sprint surged more than 14 percent in heavy trading Thursday. But SoftBank’s shares fell more than 15 percent in early trading in Tokyo on Friday.

Under the current outlines of the deal, Sprint would first issue new shares to SoftBank. That would be followed by a tender offer for Sprint’s shares, until the Japanese company reached its 70 percent target holding.

SoftBank is still lining up financing from banks, and any deal is not expected to be announced for several days at least, the person briefed on the matter said.

In pursuing Sprint, SoftBank may see an opportunity to again reshape a country’s cellphone market. The company, founded by the Internet entrepreneur Masayoshi Son, moved into wireless service in 2006 when it acquired Vodafone’s operations in Japan, putting it behind two bigger and more established rivals.

Through a combination of offering attractive devices like the iPhone and faster data networks, as well as by acquisitions, it climbed up the ranks of the Japanese market. Craig Moffett, an analyst with Sanford C. Bernstein, said it was too early to draw conclusions about the meaning of a deal between Sprint and SoftBank. He said a majority investment from SoftBank would just be an effort to scoop up spectrum, the radio waves that carry wireless services, as if it were real estate. Still, it made little sense, he said.

“There are no synergies whatsoever in a Japanese company buying a U.S. telecom operator,” he said. “This is tantamount to Japanese buyers buying Rockefeller Center.”