Sprint and Nextel, two of the top five US mobile phone carriers, are negotiating a merger, say people close to the proposed deal. The combined company would be worth about $70bn (£36bn).

The merger would create a company with about 40m subscribers, ranking it third in the US behind Cingular and Verizon Wireless. It could also trigger a fresh round of consolidation. Sprint, which is based in Kansas, and Virginia-based Nextel, declined to comment on what they called “market rumours”.