SprintNextel shares dipped as the newly merged company forming the No. 3 U.S. wireless outfit began trading on the New York Stock Exchange under the symbol “S” Monday.

The combined company declared a third-quarter dividend of $0.025 per share payable on September 30.

The two carriers completed their union on August 12 after announcing it in December 2004.

The Reston, Virginia-based company also said its local business division, which it plans to spin off within the next nine to 12 months, will have $7.25 billion in debt.

Shares of the company fell $0.22 to $25.93 in recent trading.

Tough Road Ahead?

While the duo creates a formidable player in the wireless market, Sprint’s $35-billion combination with Nextel may face a tough road ahead.

Sprint’s CEO Gary Forsee said, “Sprint Nextel will win in the market,” as the combined company looks to move up in the ranks to rival the top two cellular companies, Cingular and Verizon Wireless.

To herald the new company’s trading, Mr. Forsee and Executive Chairman Tim Donahue will ring the NYSE’s opening bell Tuesday with the “New York Stock Exchange ring tone.”

Some analysts like InStat’s Alan Hall call the merger a “very difficult challenge,” despite its good potential. Both companies have different market advantages, customer bases, and technologies. These assets could either all end up working in the merged company’s favor or against it.

For starters, the combined Sprint Nextel could potentially steal market share through both cellular carriers’ aggressive moves into the wireless data market. As voice becomes increasingly commoditized, cellular carriers are looking to win over the next generation of sales. And both Sprint and Nextel have led in revenue from data services like wireless broadband, video, and music.

Separately, the companies achieved high average revenue per user due to data services. If the new company can continue to leverage the growth of wireless data, then it will have a chance of unseating the slower-moving but bigger top two companies.

Conflicting Technology

At the same time, Nextel has always been a carrier that sells services to businesses, while Sprint has been pretty much consumer-focused. Combining the two types of customers could either end up making a well-rounded carrier or a disjointed one.

But the Sprint Nextel union will face its greatest challenges through merging technologies and networks. Nextel uses iDEN, a technology created by Motorola, while Sprint uses Qualcomm-invented CDMA. Merging cellular networks using the same technology is hard enough, but combining networks with conflicting technology is a monumental process.

Mr. Hall said that the difficult task of joining the networks is a “big con for the merger,” but thinks the union offers both companies more pros than cons.

Mr. Hall also said that as Cingular and Verizon have started to offer advanced data services, Nextel’s obvious market advantages were starting to erode.

“I think they made a very wise decision to seek a merger partner,” he said.

Under the merger, holders of Nextel stock will receive roughly 1.27 shares of Sprint Nextel common stock and $0.85 in cash in exchange for each share of Nextel common stock.