The war among major telecom providers is still ongoing, but there could be a treaty between two of the top players in the industry. It’s been widely speculated that T-Mobile US Inc. (NASDAQ: TMUS) and Sprint Corp. (NYSE: S) are in merger talks, but nothing definitive has been reported yet. A merger between these two giants could prove formidable for the likes of AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), and at the same time provide significant returns to investors, according to one key analyst.

Keep in mind that this deal is a low-to-no premium, according to media reports thus far, but Jefferies sees incredible synergies and opportunities unlocking over 40% for T-Mobile should this combination succeed.

Jefferies noted in its recent report that while it continues to see significant value in T-Mobile on a standalone basis, the firm believes that the combined company could be worth in excess of $90 a share in a deal scenario, 43% above the current price.

Currently Sprint has a market cap of roughly $31 billion and T-Mobile is pushing about $52 billion, although these pale in comparison to Verizon’s $204 billion market cap or AT&T’s $239 billion cap.

For some consideration, T-Mobile has managed three years of operating profits and net income from ongoing operations. On the other hand, Sprint has struggled for profits as the number-four player and has had massive debt and been under Softbank for some time now.

24/7 Wall St. expected this merger to be a true one rather than a big premium acquisition. After all, Sprint’s bargaining power as a standalone and holdout may be compromised due to its operating history and to its balance sheet with its $34.5 billion in long-term debt still larger than Sprint’s annual revenues.

Now CNBC’s David Faber has reported that T-Mobile and Sprint have entered into due diligence in what would be a stock-for-stock transaction that would make majority owner Deutsche Telekom the larger parent company.

According to the CNBC report, the exchange ratio of shares would be more of an at-the-market offer. That would crush the hopes of a large cash buyout or a big stock premium deal. Such a deal also reportedly may not occur for close to another month.

One issue that Faber did highlight here was that the minority shareholders would have an ownership in the mid-thirties as a percentage of the combined company. When you compare the market caps that implies a lack of a major premium.

Jefferies said in a report Tuesday:

Both parties have long expressed an interest in a merger, though we believe valuation and the regulatory outlook proved to be stumbling blocks. With press reports suggesting an all-stock deal at at-market pricing, we believe the valuation gap has narrowed significantly. Such reports also suggest Softbank’s Chairman is now willing to accept current market value, which could put even greater leverage in TMobile’s hands. While it appears an agreement on price could be near, we believe several considerations remain, including management structure, and deal break, among others.

The brokerage firm ended its report saying:

We continue to get mixed reactions from investors regarding whether or not a T-Mobile-Sprint combination would be a positive or negative for the industry, and for AT&T and Verizon more specifically. Although we have always advocated for consolidation being key to industry health, and comparisons have been made to other country’s market structures (i.e. Canada), we are now more divided on the issue. The removal of one competitor should be viewed in a positive light, though we think the aggressive tactics deployed by T-Mobile with a war chest of synergies, could actually backfire on industry stability, and create added subscriber pressures for AT&T and Verizon in the near-term. However, a difficult and lengthy integration process could prove to be an opportunity for the larger carriers to deploy significant capital for share win-back.

Shares of T-Mobile were last seen trading at $62.94, with a consensus analyst price target of $71.96 and a 52-week trading range of $44.91 to $68.88.

Sprint shares traded at $7.86. The stock has a 52-week range of $5.83 to $9.65 and a consensus price target of $7.28.

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