Crown Castle International Corp. (CCI), a leading operator of wireless communications towers in the U.S.A and Australia, declared third quarter 2008 financial results in line with our estimates.

The company performed well with respect to several parameters, including site rental revenue, gross margin, adjusted EBITDA, and recurring cash flow. Financial results are expected to be driven by substantial demand for more tower space to facilitate high-speed 3G mobile technologies. On the other hand, the level of outstanding debt remains a concern and we believe the recent stock valuation weakness may be attributed to the leveraged balance sheet.

Our long-term view regarding the wireless tower industry remains positive and our assessment of Crown Castle's increasing cash flow enables the company to withstand current credit market weakness. We, therefore, maintain our Buy rating with a reduced valuation target in light of the current economic environment.

Since Crown Castle is operating in an annual net loss position, the stock is difficult to value on the basis of its P/E ratio. With respect to other selected valuation metrics, the stock is trading at a significant discount compared to its peers (consisting of other wireless tower operators). We reduce our six-month target price to $33.50 based on 17x EV/EBITDA.

Nalak Das contributed to the report.