US carrier Sprint Nextel is facing a “very legitimate risk” of  bankruptcy in the next four years, according to a financial analyst.

The warning came from Sanford C. Bernstein analyst Craig Moffett, who said that there is a 50 per cent chance that the operator could be forced to file for protection from creditors under Chapter 11 of the federal bankruptcy code.

“Sprint’s stock price may be best thought of as the awkward probability-weighted expected value of two distinctly different outcomes,” he wrote in a research note. “In the first, the company successfully navigates its complicated Network Vision upgrade, stabilizes Clearwire’s financial position, and delivers a compelling 4G product. In the second, some combination of its gargantuan take-or-pay contract with Apple, a hobbled 4G offering, and a stupendous debt burden bring the company to its knees.”

He added that the 50 per cent likelihood of bankruptcy will come as a surprise to most equity investors, and warned that when Apple launches its LTE-enabled iPhone – which is expected later this year – it will “pose new and larger risks” for Sprint.

“We believe an LTE iPhone will likely be badly disadvantaged on Sprint’s network, potentially impairing sales… at a time when Sprint is subject to a punishing take-or-pay deal with Apple,” wrote Moffett.

“The problem is 4G. Sprint doesn’t have enough free-and-clear spectrum on which to launch a competitive LTE network, and it doesn’t have the money to clear spectrum that’s already in use. We expect Sprint’s competitiveness to begin to backslide when LTE becomes the nation’s de facto standard.”

Moffett stressed that Sanford C. Bernstein is not “predicting a Sprint bankruptcy”, but merely “acknowledging that it is a very legitimate risk”, and a risk that is rising.

“At this point we simply don’t believe there is any analytical framework that provides strong conviction as to whether Sprint can or cannot avoid bankruptcy over the next four years or so. Instead, one is left with this; are the perceived risks rising, or are they falling? We conclude … that risks of bankruptcy are rising, and that perceived risks will rise still further with the release of the first 4G iPhone.”

Sprint’s shares fell by 4.5 per cent to $2.76 as a result of the analyst note.