Two former rivals are getting together with Sprint Nextel’s acquisition of Virgin Mobile USA for about $483 million.

The acquisition means Sprint, which already owns 13 percent of Virgin Mobile, will operate the Virgin Mobile brand along with its Boost Mobile prepaid business.

Boost Mobile ratcheted up competition in the prepaid space earlier this year when it announced a $50 per month plan for unlimited talk, messaging and mobile Web access – eliminating taxes and fees on top of that. Virgin Mobile later launched its own $50 plan, and more recently, TracFone Wireless introduced Straight Talk, a $45 prepaid unlimited plan.

But soon Boost and Virgin will join forces, assuming the deal gets all of the necessary approvals . Virgin Mobile USA CEO Dan Schulman will lead the prepaid business, reporting directly to Sprint CEO and President Dan Hesse. Matt Carter will continue in his role leading Boost Mobile and will report to Schulman.

Among the benefits Sprint lists of the transaction: a stronger position for Sprint in the prepaid segment, enhanced cross-selling of a full suite of Sprint products and services across a larger target audience, free cash flow accretive for Sprint before “synergies,” and a deeper managerial talent pool.

Pali Research analysts say the transaction is a good one for Sprint because it provides 5 million customers who are already using its network under the MVNO arrangement and doubles the size of Sprint’s prepaid business overnight. The analysts say they believe Virgin Mobile felt compelled to sell because its customer base was declining, the prepaid space is getting much more competitive and it faced a $100 million debt maturity at the end of next year, and it might not have had enough free cash flow to pay it off. The agreement amounts to Sprint paying $130 per subscriber, which is slightly above what it costs Virgin to acquire a customer.

“The deal is a mild negative for Leap and Metro PCS,” the Pali analysts say in a research note. “Virgin really was not a player in the unlimited prepaid space, but their distribution channels will likely help Boost Unlimited expand, and there is the possibility, although unlikely, [that] Sprint reinvigorates Virgin’s unlimited offering.”

One of the big unknowns going forward is about the brands, notes telecom analyst Jeff Kagan. Sprint, Boost Mobile and Virgin Mobile each have three different identities. “Will Sprint consolidate the brands going forward, or keep operating them all separately?” he asks.

Both Boost Mobile and Virgin Mobile historically have gone after the youth market, although Boost more recently has made moves to broaden its base.

While Sprint is increasing its presence in prepaid with the Virgin Mobile acquisition, its rival carrier in the CDMA space has not been as aggressive in pursuing prepaid customers. Verizon Communications President and COO Denny Strigl reiterated that position in a conference call with analysts yesterday, saying Verizon Wireless is committed to the retail postpaid market, even though its brand is on reseller TracFone’s Straight Talk product. Strigl described the use of the Verizon brand on the packaging as an experiment or six-month trial.

Sprint’s acquisition of Virgin Mobile is expected to close in the fourth quarter or in early 2010; it’s subject to various closing conditions, including regulatory approvals. The Virgin Group and SK Telecom have agreed to vote a portion of the Virgin Mobile USA voting shares owned by them that, when aggregated with the voting shares owned by Sprint, comprise about 40 percent of the outstanding voting power.