Sprint (S) executives failed to convince antitrust officials at the Justice Department of the merits of a combination with rival T-Mobile US, according to Bloomberg News.

The report highlights the high regulatory hurdle facing a potential $20 billion buyout of the No. 4 U.S. wireless provider by Sprint.

While such a transaction would allow Sprint and T-Mobile to better compete with industry leaders AT&T (T) and Verizon Wireless, it would also leave just three big players in the wireless space.

During a meeting this month with senior antitrust officials, Sprint executives encountered resistance from the DOJ to a potential takeover of T-Mobile, Bloomberg reported.

Sprint declined to comment, while the DOJ did not respond to an inquiry.

Shares of T-Mobile fell 2.26% to $31.58 Wednesday morning, while Overland Park, Kan.-based Sprint slumped 4.29% to $8.48.

The apparent skepticism from regulators is not surprising. In 2011, the DOJ sued to block AT&T’s $39 billion effort to buy T-Mobile due to antitrust concerns.

Recent reports indicate Japan’s SoftBank, which owns majority control of Sprint, is in talks with bankers over financing a potential $20 billion offer to buy T-Mobile. Banks involved in the negotiations include Credit Suisse (CS), Mizuho Bank, Goldman Sachs (GS) and Deutsche Bank (DB).

Follow Matt Egan on Twitter @MattMEgan5