Shares of Sprint Nextel Corp. (NYSE:S), which fell 16 percent Monday, could fall further given its uncertain EBITDA, high debt leverage and lack of free cash flow.

"We also believe it needs to develop a clear 4G strategy, including financing or taking control of Clearwire. At $2.00, Sprint would be trading at 4.0x our 2012 EBITDA estimate, excluding any investments it would need to make in Clearwire, spectrum or an acceleration of its network modernization program," BTIG analyst Walter Piecyk wrote in a note to clients.

The analyst, who upgraded the stock to "neutral" from "sell" only on valuation, said investors are overly-optimistic about the margin expansion opportunities at Sprint over time, especially given its lack of control of Clearwire, lack of alternative 4G strategy and execution risk of a major network modernization program.

In addition, Piecyk no longer expects Sprint to generate free cash flow in 2012 based on a $200 million reduction to his EBITDA estimate and a $450 million increase to capital spending estimate in that year.

"We believe Sprint needs to refinance $2.3 billion of debt maturities that are coming due in the first quarter of 2012, which will increase its flexibility to finance Clearwire and accelerate its Network Vision plans," the analyst wrote.

Sprint's options for resolving Clearwire have been reduced since it did not take advantage of its previously inflated stock price to take control of Clearwire. Providing Clearwire with funding seems like a more likely solution at this point although Sprint is likely motivated to first refinance its debt maturities, he said.

Sprint had lost customers to bigger rivals like Verizon (NYSE: VZ) and AT&T (NYSE:T) and spent heavily on advertisements that eroded its profit margins. In a world where AT&T added 331,000 subscribers and Verizon added 1.3 million subscribers, Sprint lost 101,000 net postpaid subscribers during the second quarter.

For the second quarter, the company lost $847 million, or 28 cents per share, compared to a loss of $760 million, or 25 cents per share, last year. Revenue, however, rose to $8.3 billion from $8 billion a year-ago.

Market also doubts whether Sprint would continue its partnership with Clearwire (NASDAQ:CLWR) after the current deal expires in 2012. Sprint recently struck a 15-year deal with rival LightSquared. Sprint also cut its voting stake in Clearwire to 49.8 percent from 53.7 percent.

Shares of Sprint fell 16 percent to $3.13 Monday on the NYSE. In the pre-market hours Tuesday, the stock rose 3 percent to $3.23. For the past 52-weeks, shares of the company were trading between $3.11 and $6.45.