Yes, the iPhone 5 does require a factory reset to switch back to CDMA from GSM.
My iPhone 5 was purchased from Walmart and I use it as a StraightTalk CDMA phone at home. In my case, StraightTalk uses the Verizon network since that is the only carrier that provides service in our neighborhood.
When I travel to Amsterdam I insert my Sim card and the phone becomes a GSM phone. Unlocked GSM for the iPhone 5 is a FCC requirement. My European carrier is Vodafone but there are plenty of others. You can purchase a Sim card in most European airports. They usually come with a 25 Euro credit and you can always add money using your iPhone or through the carrier website (you just have to create an account). The default "unlock code" is "0000" most of the time and you can change that.
Be careful if you want to use your phone for internet access. Go to the carrier website and check their various options for internet access. Vodafone calls them "bloX" and you can turn them on and off. Some are free and give a certain amount of GB per day or you can turn one on that gives you a lot more for a small amount per week or per month.
If you do not select one of these options your iPhone will eat up your credit rapidly because certain apps will access the internet without your permission. Cost per call on a "Pay-as-you-go" Sim card is in the 25 Euro cents per minute range and each app internet access is rated as a call. There are also options for decreasing calling costs. These are usually effective if you stay for longer periods of time. If you do not need internet access make sure to turn off "Data Roaming" on your iPhone (Settings/General/Cellular).
If you do want internet access, you will need the carrier APN (Access Point Name).
After removing the Sim card back in the US, my phone did not turn back into a CDMA phone. After lengthy and frustrating calls with StraightTalk it finally became clear that I had to do a factory reset. Apparently, StraightTalk gets confused when there is another carrier APN on the phone. After the reset you go through a simple setup procedure and your CDMA phone is back.
Of course, a factory reset will delete all your data and apps. However, if you do a backup of your iPhone before the reset it is no big deal. My iPhone is backed up to my Mac using iTunes with the cable connection (you can also use iCloud). After the reset, the complete restore was done in just a few minutes.
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