T-Mobile USA will merge with smaller rival MetroPCS Communications Inc., a deal that would give the fourth-largest U.S. wireless carrier more scale as it tries to compete with the industry's leaders.

The move further consolidates the U.S. wireless industry, but in a way that is likely to be well received by regulators, who last year shot down T-Mobile's $39 billion deal to be acquired by AT&T Inc. to avoid reducing the ranks of national carriers from four to three.

It also puts pressure on No. 3 wireless carrier Sprint Nextel Corp. , which had previously explored mergers with both MetroPCS and T-Mobile and now lacks a clear path for quickly adding scale.

The combined company wil be called T-Mobile and run by T-Mobile Chief Executive John Legere. MetroPCS customers will be moved over to T-Mobile's network gradually as they upgrade their phones, and the smaller company's network will be shut down in 2015.

The deal is structured as a reverse merger, meaning MetroPCS in effect will swallow its larger rival. That approach will give T-Mobile a publicly traded stock, which would give T-Mobile parent Deutsche Telekom AG a new route to raise capital for its U.S. subsidiary, as well as a path to pare down its investment in the U.S. over time.