Shares of T-Mobile and Sprint rose Friday after a report that the two wireless companies are close to reaching an agreement to merge.

According to a Reuters report citing anonymous sources, T-Mobile is close to agreeing to “tentative terms” on a combo with Sprint. Under the terms of the proposed pact, Deutsche Telekom — T-Mobile’s majority owner — would own a majority stake in the combined entity, with Japan’s SoftBank Group owning 40%-50%, according to the report.

Sprint’s stock was up 3.6% in pre-market trading, and T-Mobile shares climbed 1.3%.

Both companies have fought to take on the two biggest U.S. wireless carriers, AT&T and Verizon Wireless — and by teaming up would represent a powerful No. 3 player in the mobile biz with more than 120 million customers total. T-Mobile and Sprint have engaged in talks over the last four months about merging, Reuters reported.

Final merger terms between T-Mobile and Sprint are expected to be reached by the end of October, Reuters reported, although it added that the deal could still fall through.

Last month, in discussing quarterly earnings, Sprint CEO Marcelo Claure was asked about rumored mergers and he responded that “we don’t discuss a lot of what happens as it relates to potential M&A, and we’re going to leave that to a final announcement that should be coming in the near future.”

T-Mobile has been particularly aggressive — and successful — in challenging its two larger rivals. T-Mobile moved its standard offering to unlimited-usage plans earlier this year, spurring AT&T and Verizon to roll out similar plans. And earlier this month, T-Mobile launched a new perk for subs on unlimited family plans: a free standard Netflix subscription (to customers with at least two lines).

In the second quarter, the carrier (or “Un-carrier,” as T-Mobile brands itself) added 1.3 million net new subscribers, to stand at 69.6 million total customers as of the end of June. Sprint reported total wireless net adds of 61,000 for the quarter ended June 30, ending the period with 53.7 million subscribers.

Both Sprint and T-Mobile have the subject of speculation that they could be M&A targets for Comcast or Charter Communications, but analysts believe such deals are unlikely to come to fruition. The two biggest U.S. cable operators announced an agreement to develop technical infrastructure for wireless operations in May.