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(Reuters) - T-Mobile US Inc agreed on Sunday to acquire peer Sprint Corp, in an all-stock deal for $26 billion that will combine the third and fourth largest U.S. wireless carriers and is expected to attract regulatory scrutiny over its impact on consumers.

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Smartphones with the logos of T-Mobile and Sprint are seen in this illustration taken September 19, 2017. REUTERS/Dado Ruvic/Illustration

The agreement caps four years of on- and off- talks between the companies, setting the stage for the creation of a carrier with 127 million customers that will be a more formidable competitor to the No.1 and No.2 wireless players, Verizon Communications Inc and AT&T Inc.

U.S. regulators, which have challenged in court AT&T’s $85 billion deal to buy U.S. media company Time Warner Inc, are expected to grill Sprint and T-Mobile on how they will price their combined wireless offerings.

The breakthrough in the companies’ negotiations, first reported by Reuters on Thursday, came after T-Mobile majority-owner Deutsche Telekom AG and Japan’s SoftBank Group Corp, which controls Sprint, agreed on a structure that will allow Deutsche Telekom to continue to consolidate the combined company, which will have a market value of over $80 billion, on its books.

Deutsche Telekom will own 42 percent of the combined company, and will control the board of the combined company, nominating nine of the 14 directors.

The implied equity valuation for Sprint is $6.62 per share based on T-Mobile’s closing share price on Friday.

The all-stock transaction is at a fixed exchange ratio of 0.10256 T-Mobile shares for each Sprint share, or the equivalent of 9.75 Sprint shares for each T-Mobile US share.

Sprint’s and T-Mobile’s first round of merger talks ended unsuccessfully in 2014 after U.S. President Barack Obama’s administration expressed antitrust concerns

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