SHARES in Sprint Nextel fell 4.5 per cent yesterday after an analyst report said there is an increasing risk that the US mobile provider could end up filing for bankruptcy in the next five years.
Bernstein analyst Craig Moffett downgraded Sprint shares to “underperform” from “market-perform” saying that the company will face “new and larger risks” if Apple launches a high-speed iPhone later this year based on a technology that Sprint’s bigger rivals have installed more widely.
He said the company’s five-year credit default swaps already price in a roughly 50 per cent probability of bankruptcy.
“To be clear, we are not predicting a Sprint bankruptcy. We are merely acknowledging that it is a very legitimate risk. And notwithstanding a recent rally in Sprint shares, we believe that risk is rising,” Moffett said in a research note.
In February, the third-largest US mobile network operator by subscriber numbers reported a fourth-quarter net loss of $1.3bn (£800m), mainly reflecting the steeper costs of selling Apple’s iPhone 4S.
A spokesperson for Sprint declined to comment.