Deutsche Telekom is in talks to acquire MetroPCS Communications and combine it with T-Mobile USA. A merger with the fifth largest telecommunications network in the US could be just what Bellevue, Washington’s T-Mobile needs to effectively compete with the nation’s top carriers following the failed acquisition attempt by AT&T.

Stock value in Richardson, Texas-based MetroPCS peaked at 26 percent once news of the merger broke, the highest level in 14 months. T-Mobile has about a third of the subscribers (33.2 million as of June 2012) that rivals AT&T and Verizon enjoy. The parent company is hoping a merger can reduce customer loss, partially due to the fact that T-Mobile is now the only major US wireless carrier that doesn’t carry the iPhone. They have lost 2.76 million subscribers on contract in the past two years – or roughly 10 percent of their customers. A merger would bring in an addition 9.3 million prepaid customers

If the deal goes through, Deutsche Telekom would become the majority stakeholder in the combined company. Bloomberg is reporting that the advisory board for Deutsche Telekom is expected to meet tomorrow in Bonn, Germany to approve the transaction.

Deutsche Telekom has confirmed that discussions are ongoing but the noted that they are at a stage where significant issues haven’t yet been finalized nor have contracts been signed. The company further points out that a conclusion is still not certain. Representatives for MetroPCS have also confirmed the news via a published statement.

Update: Deutsche Telekom now says they have struck a deal that will see MetroPCS receive $1.5 billion in cash and a 26 percent stake in the combined company.