iPhone Causes Sprint Deal Hang-Ups (Update 1)

Updated with analyst earnings estimates and afternoon share prices.

NEW YORK (TheStreet) -- Apple(AAPL) may be taking a bite out of Sprint's(S) acquisition ability as the nation's third largest carrier tries to digest a spectrum partnership with Clearwire(CLWR) and hunt for deals to grow its subscribers.

In October Sprint announced a $15.5 billion four year deal to carry the iPhone and keep pace with its larger competitors AT&T(T) and Verizon(VZ) . That deal -- and a commitment to improving smartphone services through a program called "Network Vision" and a multi-billion dollar 4G build with Clearwire -- may be the reason that Sprint's board reportedly iced a $7.3 billion acquisition of MetroPCS(PCS) .

Sprint Chief Executive Dan Hesse was "hours away" from announcing a deal to buy MetroPCS until the board vetoed the acquisition last Wednesday, according to Friday reports by CNBC. Analysts now say that while an acquisition of MetroPCS and its pre-paid cellular service competitor Leap Wireless(LEAP) are likely in the user and service growth starved wireless industry, Sprint's expensive commitment to Apple and Clearwire made a deal untenable in the near-term.

Sprint's inability to cut a deal, taken with weaker than expected fourth quarter industry profitability may signal that wireless carriers are struggling to find returns on surging iPhone sales, which drove record quarterly profit at Apple. The Sprint deal also may highlight new reasons why failed consolidation is a possible industry game changer, even as analysts and investors expect 2012 deals.