In its online edition, the newspaper cited government officials as saying Berlin was all but resigned to the deal with U.S. telecommunications group AT&T Inc (T.N) falling through or to Deutsche Telekom attempting to reconfigure it.
Officials declined to comment on alternative options, but said Deutsche Telekom had not been provided with an early and comprehensive picture of the regulatory risks surrounding the sale of T-Mobile USA, the fourth largest U.S. cellphone company, to AT&T, the number two player, according to the article.
The German government, which has a 32 percent stake in Deutsche Telekom, declined to comment on the FT report.
People familiar with the matter told Reuters on Thursday that AT&T Inc and T-Mobile USA's parent company Deutsche Telekom were still battling to save their $39 billion merger and were not in talks about a network-sharing alternative.
AT&T is still holding discussions with more than one party over the possible sale of a multibillion portfolio of assets and has been talking in recent weeks to potential buyers such as Leap Wireless International Inc (LEAP.O), MetroPCs Communications Inc (PCS.N) and Carlos Slim's TracFone about the disposal of assets in potentially concentrated markets, the FT reported.
The newspaper cited people familiar with the parties' thinking as saying that, while talks over potential remedies will continue, the case is likely to be decided in court in February.
Regulators oppose the merger of T-Mobile with AT&T because they think it will damage competition.
A Federal Communications Commission staff report released on Tuesday took issue with many of AT&T's touted benefits and said the companies failed to prove the transaction was in the public interest.
(Reporting by Michelle Martin; editing by Andre Grenon)
Posted by Jason Lomberg, Technical Editor