We downgrade our recommendation on
Crown Castle International Corp.
) to Neutral based on its extremely high level of current
valuation. The stock price has soared nearly 62% in the last
year. The company posted solid financial results for the third
quarter of 2012. Management has raised 2012 adjusted EBITDA
Massive growth of mobile broadband, higher usage of
smartphones and tablets together with increased deployment of 4G
LTE networks are the long-term positives for the wireless tower
industry. We believe future financials of the company will be
driven by substantial demand for more tower space to facilitate
high-speed wireless networks. Our long-term view regarding
wireless tower industry remains intriguing and we believe Crown
Castle is well positioned to capitalize on these opportunities.
Wireless services are advancing rapidly in terms of additional
features and capabilities. Much of the infrastructure and
upgrades require effective site management of cell towers and
equipment. Crown Castle effectively addresses this opportunity as
95% of its quarterly revenue is currently derived from wireless
service providers. The company accumulates most of its revenue
from long-term (typically 5-10 year) tower leases. Growing
popularity of smart-phone devices is further expected to propel
demand for wireless data and video services through web
The newly acquired T-Mobile wireless towers will enable Crown
Castle to improve both its top and bottom line. Crown Castle has
completed the acquisition of 7,200 wireless towers of T-Mobile
USA for a total consideration of $2.4 billion. With this
acquisition, Crown Castle has become the largest wireless tower
operator in the U.S. outpacing its closest competitor
American Tower Corp.
AMER TOWER CORP (AMT): Free Stock Analysis
CROWN CASTLE (CCI): Free Stock Analysis
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