It was not immediately clear how Iliad, which has a market capitalisation of just above $16 billion, would finance a deal for the fourth-largest U.S. wireless operator, which has a market value of about $25 billion (14.80 billion pounds).

The person asked not to be named because the matter is not public.

Representatives for Iliad and T-Mobile did not respond to requests for comment on the news, which was earlier reported by the Wall Street Journal.

The offer, which was made to T-Mobile's board less than a week ago, involved control of the U.S. company and Iliad was working with several banks to secure financing, the Journal reported. (http://on.wsj.com/1o8WRKT)

Japan's SoftBank Corp 9984.T, which controls Sprint, and T-Mobile's 67-percent owner Deutsche Telekom AG DTEGn.DE have agreed to broad terms of a deal, under which Sprint would pay about $40 per share, valuing T-Mobile at nearly $32 billion, Reuters reported in early June.

That merger is not expected to occur before September, Reuters reported earlier this week.

"The opportunity for a transaction that brings capital and spectrum would be highly beneficial," T-Mobile Chief Executive John Legere said on CNBC earlier on Thursday.

"The opportunity to bring Sprint and T-Mobile together is one. But there are many different ways to do this and we will consider all of them," he said.

T-Mobile shares were up 4.4 percent at $32.30 on the New York Stock Exchange. Sprint shares fell 6.6 percent to $7.25.

(Reporting by Edwin Chan in San Francisco, Supantha Mukherjee in Bangalore, Marina Lopes in New York and Leila Abboud in Paris; Editing by Ted Kerr and Bernadette Baum)

By Soyoung Kim