Sprint Nextel Corporation will be acquiring Virgin Mobile in a deal worth $483 Million. This acquisition will boost Sprint’s prepaid business in both its Boost unit and its main CDMA network.

In short I think this is a good move. Now Dan Hesse needs to focus on integrating Virgin into the Sprint Nextel family at both a business and operational level. Merger integration is usually where most mergers and acquisitions fail. It is not enough to simply acquire the company. The acquirer must fully integrate all financial and technical operations of the acquisition or else it runs the risk of skyrocketing operational expenses, possible capital expenditures, management confusion in the decision making process, disconnected customer care, disconnected marketing campaigns, confusing marketing messages, disconnected fiscal controls, and customer billing problems.

Before the acquisition, Sprint was already the networker of Virgin Mobile so at a minimum the company should not have any network issues. In other words, Virgin’s traffic is already on a CDMA network so technically all Sprint would be seeing is an increase in the prepaid usage on the CDMA network. Therefore, there should not be any real operational issues.

Sprint Nextel will be able to use Virgin Mobile to go after a cooler and younger customer group.

Another challenge for Sprint is the branding issue. Sprint is currently managing its own brand, the Nextel brand, the Boost brand, and will now manage the Virgin Mobile brand. It is not as easy as you would think. Brand management is tough. Sprint needs to be able to increase all of the products’ perceived value to the customer and thereby increase brand equity. Brand management needs to be able to meet a perceived level of quality. Of course in the case of Sprint and its new brand, it needs to establish a common level of brand quality.

Structurally, the new Virgin Mobile brand fits right into Sprint’s prepaid (pay as you go) model. However, as I had indicated thinking it is easier than getting it done. Merger integration work is one of the toughest things to complete in a merger acquisition and usually the one thing investment bankers ignore.

The Virgin Mobile deal is a bold and aggressive move. Now all Dan Hesse has to do is focus on integrating the company into Sprint.