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Germany's Deutsche Telekom would face management and antitrust issues if it tried to buy U.S. wireless carrier Sprint Nextel.

A German magazine on Saturday reported that Deutsche Telekom DT is mulling a bid for Sprint Nextel S , resurrecting rumors that surfaced two months ago. Other reports followed, and the Wall Street Journal also reported later Monday that Sprint is looking at possibly spinning off Nextel.

Analysts question any DT-Sprint deal, pointing to Sprint's fourth-quarter loss of $29.5 billion.

If Deutsche Telekom merged the nation's No. 3 wireless carrier with its T-Mobile USA, which is No. 4, it would create the largest U.S. wireless carrier. It would have more subscribers than No. 1 AT&T T . Verizon Wireless ranks No. 2.

Some lawmakers would oppose having a foreign company in control of the nation's biggest wireless firm, analysts say.

They say Deutsche Telekom also would have challenges trying to fix Sprint's network, marketing and customer service problems, while integrating it with T-Mobile.

"A deal would create a hobbled competitor struggling with a year or more of antitrust merger reviews and a bloated cost structure," said Craig Moffett, an analyst at Bernstein Research.

Networks Not Compatible

The companies have declined to comment. Sprint's shares on Monday rose 10.5%, getting a late boost on the Nextel spinoff report. Deutsche Telekom's U.S. shares fell 1%.

One issue is that T-Mobile's network uses a technology called GSM, which dominates in Europe and some other areas. Sprint Nextel runs two networks, one mainly for consumers, the other for business users.

Neither runs on GSM, meaning that customers could not use the same phones to make calls. It also means T-Mobile likely wouldn't see the network cost cuts typical to most phone mergers.

Deutsche Telekom would have a challenge migrating Sprint Nextel's customers to T-Mobile's GSM network, Moffett says. The process could take five years, he says.

Many of Sprint's current problems stem from its poorly executed merger with Nextel in 2005. The company ousted Gary Forsee as chief executive last year and brought in Dan Hesse, who was head of Embarq EQ, the former Sprint wireline business.

The Journal report later Monday said Cyren Call, a company founded by Nextel founder Morgan O'Brien, is trying to assemble a consortium of investors to acquire Nextel.

T-Mobile USA, which has focused on younger users, has had few hiccups, analysts say. Its growth has been a boon to Deutsche Telekom, which needs wireless growth to offset declining sales and profit from its phone business in Germany.

T-Mobile USA added 3.6 million customers in 2007, ending the year with 28.7 million subscribers. Sprint Nextel had 53.8 million customers as of Dec. 31, up 1.7 million from a year earlier.

Merging Sprint Nextel with T-Mobile could create a stronger marketing company, says James Moorman at Standard & Poor's. "It might solve some of Sprint's brand image problems," he said.

A combined company, however, might not grow any faster than T-Mobile USA has on its own, Citigroup analyst Michael Rollins says. He says Sprint Nextel subscribers could get confused. "Another network migration would be very hard on customers," Rollins said.

Congress Disliked Earlier Deal

He also says there's only a 50% chance federal regulators would approve a Deutsche Telekom purchase of Sprint Nextel. If combined, Sprint and T-Mobile would hold about 31% of the U.S. wireless market, topping AT&T's 28%.

Deutsche Telekom entered the U.S. market in 2000 when it bought VoiceStream for $31 billion in cash and stock.

Though Voicestream was small, 30 U.S. senators asked the Federal Communications Commission to consider the deal's national security implications. The chief opponent, Sen. Ernest Hollings, D-S.C., retired in 2004.

Deutsche Telekom seems more committed to the U.S. market of late, analysts say. T-Mobile USA has lagged other wireless firms in rolling out a next-generation 3G network, with faster data speeds.

On Monday, T-Mobile USA said it has launched 3G services in its first market, New York City.

One plus with Sprint is that it would boost T-Mobile's U.S. airwave holdings, helping it roll out 3G and other new services.

In February, Deutsche Telekom completed its purchase of Berwyn, Pa.-based SunCom Wireless Holdings for $1.6 billion.

Still, some analysts say DT's acquisition strategy is focused on Europe.

The company is nearing a deal to acquire a strategic stake in Greece's No. 1 phone company, OTE. That deal would give Deutsche Telekom assets in eastern Europe.