Shares in Sprint Nextel fell more than 4 percent after an analyst report said there is an increasing risk that the No. 3 U.S. mobile provider could end up filing for bankruptcy as the debt-laden company faces steep costs due to factors such as its iPhone deal with Apple Inc .

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 than Sprint.

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.

A Sprint spokesman was not immediately available to comment.

Sprint shares were down 13 cents, or 4.5 percent, to $2.76 in late morning trading on the New York Stock Exchange after the report was released.

(Reporting By Sinead Carew; Editing by Tim Dobbyn)

Apple inc. Sprint Down