A merger between Sprint and T-Mobile might not just be good for overall U.S. wireless market competition, it might also be necessary, at least according to some analysts.

A recently released report from New Street Research strongly states that Sprint and T-Mobile need to merge in order to compete successfully in the U.S. wireless market. The report cites the companies' finances in relation to the juggernauts of Verizon and AT&T. According to New Street, Sprint and T-Mobile will have to raise $10 billion in additional funds over the next 18 months in order to remain viable, an effort New Street believes is an uphill battle.

"Our analysis shows that neither Sprint nor TMUS have enough revenue to cover their fixed costs and it is highly unlikely that both will capture enough new revenue to do so," New Street wrote. "Both companies aren't independently viable at the same time. We show that there simply isn't enough revenue in the industry for four carriers to cover their fixed costs unless there is a significant shift in market share."

New Street admits that although a merger is necessary as soon as possible while both companies still have momentum, it is unlikely to go through due to concerns about market consolidation from the U.S. Department of Justice and the FCC. Even after combining, Sprint and T-Mobile would have less subscribers than AT&T alone.

"If the companies merge now, while they are in relatively good shape, the merger will result in lower costs in the context of an improving business, which our data suggests should lead to investment and lower prices. If the companies are only permitted to merge when one has faltered or failed, the combined company will be less well-positioned to compete against the two well-funded incumbents," the analysts write.

After reviewing 21 markets in developed countries in relation to consolidation New Street found that average pricing dropped 15-40 percent in the Netherlands, Greece, and Austria after the number of major national carriers dropped from four to three. Similar results could happen in the United States, New Street believes.

A major source of concern about the future of the U.S. wireless industry is the 2015 FCC wireless spectrum auction. Next year, the FCC will be auctioning off the 600 MHz spectrum, a highly-coveted piece of the wireless industry that could have implications for years to come. Sprint and T-Mobile desperately need to acquire low frequency holdings such as 600 MHz (the current lowest frequency in use by carriers is 700 MHz) in order to efficiently increase their coverage footprint, especially in rural America.

"Depending on the outcomes of the spectrum auctions, it could get a whole lot worse in terms of a handful of companies being able to tilt the field in their favor," said Matthew Hindman, an associate professor at the School of Media and Public Affairs at George Washington University.

Another problem is that it's not only wireless carriers with huge pockets and lobby power like Verizon and AT&T that Sprint and T-Mobile will be up against for the important spectrum -- there's competition from all sides.

"The wireless industry not only faces new competition from more Wi-Fi buildouts but can also offer new competition to the wired broadband industry," BTIG analyst Walter Piecyk said. "Competition is not just about lower prices but also about investment in the network, a reality that is likely to be recognized in several European markets that are evaluating the benefits of consolidation."