So the Sprint (NYSE:FON) and Nextel (Nasdaq:NXTL) merger was concluded after all the speculation and some naysayers claiming that elements such as the disparate networks of both operators would make a fusion practically impossible.  The new merged company will have about 40 million subscribers, compared to 47 million subs from Cingular, the industry leader.  In the deal (called "a merger of equals"), Sprint (the number 3 wireless operator) is purchasing Nextel (the number 5 wireless carrier) in exchange for stock and cash.

As part of the fallout of the deal, there has been some speculation that Motorola (NYSE:MOT) would lose its privileged monopoly status with Nextel.  This is because Sprint's 20.1 million customers rely on CDMA technology, whereas Nextel's 15.3 million subscribers belong to iDEN (Integrated Digital Enhanced Network), a network based on Motorola's digital radio technology.

However, Sprint Nextel management claimed that it plans to continue investing in the iDEN network through 2007. Therefore, based on that, there does not seem to be likely for there to be an impact to Moto's short term bottom line, particularly given the fact that the deal is not expected to be finalized at least until late 2005. Moreover, there is the push to provide dual-mode iDEN/EV-DO phones to the new company.  Despite that, the margins for these dual mode phones are not expected to be as attractive, particularly due to the CDMA royalties on the handsets and the high level of complexity in such dual mode devices. 

Motorola will have a challenge in trying to get additional CDMA cell phone business at Sprint.  For one thing, the competition will be tough: Samsung and Sanyo have a good penetration at Sprint, whereas LG is apparently the only vendor that seems to be gaining some better traction.