In a prospective deal which may pose substantial challenge to the two US wireless market bigwigs, AT&T and Verizon Wireless, the third-ranking US carrier Sprint Nextel revealed in a Thursday statement that it is negotiating with Japan-based telecom firm SoftBank for a "potential substantial investment."

According to an `inside' source, the potential talks between Sprint and SoftBank commenced in summer this year. The source also revealed on the condition of anonymity - because of not being authorized to make public statements - that the two companies a working out a deal in which SoftBank may make a $12.5 billion investment in Sprint, in exchange for a nearly 70 percent share in the company.

The noteworthy investment from SoftBank will apparently give Sprint the chance to take on AT&T and Verizon, which - as per Goldman Sachs Group - together hold nearly 75 percent of the US market for contract customers.

In addition, the SoftBank investment may also benefit Sprint in the direction of acquiring complete control of Clearwire, the US-based wholesale wireless carrier in which Sprint already has a 48 percent stake.

Noting that the SoftBank backing will give Sprint a boost in a market in which "tremendous long-term investment" is required for network upgrades, Current Analysis' research director Avi Greengart said: "Sprint definitely seems like it's on a positive trajectory. But they could use a financial backstop."