Although AT&T could still try to fight the Department of Justice in court, alternatives to a full-blown merger are looking more likely, the WSJ said, citing people familiar with the matter.

Those options could include AT&T taking a stake in the smaller carrier or a joint venture to share network technology, the report said.

The Justice Department said on December 9 that it would seek to stay or dismiss its lawsuit to stop the deal, saying it was effectively dead without approval from telecommunications regulators.

AT&T and Deutsche Telekom's T-Mobile moved in November to withdraw their filing with the Federal Communications Commission to focus on the antitrust battle.

Both regulators have to given their blessing to the deal.

(Reporting by NY Equities Desk, Editing by Gary Crosse)

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