The AT&T (NYSE: T) and T-Mobile merger has been grabbing headlines for months now. The Department of Justice opposes it, and arguments have been raised regarding possible rate increases and fewer options. A healthy dose of the consternation has come from Sprint Nextel (NYSE: S), which fears losing its market share -- and its business entirely -- if the deal goes through. What will happen to the third-biggest U.S. wireless operator if the merger happens?

Left out in the cold  
The $39 billion deal would make AT&T the largest U.S. wireless service company, adding 33.7 million subscribers to its 95.5 million-strong customer user base and helping it grab 43% market share. The current market leader, Verizon Communications (NYSE: VZ), would move to second position in the U.S. telecom industry with a little more than 102 million subscribers.

Sprint has consistently reported losses for the past 15 quarters, with its bottom line suffering because of increasing operating expenses. In the second quarter, the wireless-service provider reported just a 3.5% revenue increase, and with only 49 million subscribers -- roughly 16% of the market -- Sprint could have a tough time maintaining even that level.

Reading the crystal ball
Sprint is the first mover in 4G and has a larger 4G device portfolio than any of its competitors. However, AT&T is set to launch its LTE network and release 20 4G devices this year, the first of which is the HTC Inspire 4G, which stands as one of AT&T's best, high-end Android devices. Sprint might lose its 4G leadership advantage in the event of a merger, which would allow AT&T to expand its 4G LTE wireless coverage to 97% of the American population.

Foolish bottom line
Despite being the third-largest telecom company, Sprint is not in a position to participate in the telecom war, and that's why it's feeling insecure. But even if the merger takes place, I think its market share would hold steady, and it wouldn't lose its third-place status, even as AT&T and Verizon swapped the top two spots. In fact, if the deal does go through, the picture may be even grimmer for the current market leader, Verizon, than for Sprint. Should Sprint sit back and chill? What say you, Fools?

Fool contributor Abantika Chatterjee owns no shares of any of the companies mentioned in this article. Motley Fool newsletter services have recommended buying shares of AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.