Shares of Sprint (NYSE:S) have erupted Thursday after a report in the Wall Street Journal said Japan’s Softbank is in “advanced talks” to make a substantial investment in, or even to acquire, the whole company.

At a glance, a deal would make sense. Softbank is a large mobile carrier in Japan and generates healthy cash flows, but is looking to expand its market opportunity. Meanwhile, Sprint is looking for ways to bite into the virtual duopoly of AT&T (NYSE:T) and Verizon (NYSE:VZ), all while fighting off lower-cost provider T-Mobile USA, which recently has agreed to merge with MetroPCS (NYSE:PCS).

Sprint also could benefit from Softbank’s financial resources. The company is in the process of rolling out its LTE network, which will not be cheap — but substantial capital investments will be necessary to remain competitive against its better-funded rivals.

The nation’s No. 3 telecom looked hopeless going into 2012, but the company has been on fire since May thanks to the launch of Apple’s (NASDAQ:AAPL) new iPhone as well as improvements in the core business. Today’s early gains of 16% have S shares up more than 140% year-to-date.

Tom Taulli runs the InvestorPlace blog IPOPlaybook, a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “How to Create the Next Facebook.”  Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.