Sprint Nextel's Bleak Outlook

Even with the introduction of Samsung's Instinct touch-screen handset, which is exclusive to the Sprint network and is priced competitively at $129.99 in order to fend off Apple's (AAPL Quote) iPhone, Arden says that Sprint suffers from "the lack of attractive handsets and features relative to 3G wireless networks.

"Additionally, Sprint Nextel will be challenged to grow its customer base over the next few years as wireless industry penetration passes 85% and competition increases from other carriers, including AT&T Mobility and Verizon Wireless," Arden wrote in his report.

However, a divestiture of the company's iDEN network would be a positive for the overall business risk profile, Arden says. "In addition, if the approximate $5.4 billion of Nextel debt were transferred to that entity in the event of a sale, the new Sprint would also likely have a better financial risk profile with a correspondent reduction in leverage. Still, since the Nextel business is largely integrated, disaggregating it could cause additional operational challenges for Sprint, which could negate some of the benefits."