Cogent Communications Conference Call Summary Company Overview - **Company**: Cogent Communications (NasdaqGS:CCOI) - **Event**: 2025 Conference at the Bank of America Leveraged Finance Conference - **Date**: December 02, 2025 Key Points Wavelength Business - **Current Revenue**: Q3 wavelength revenue increased by $1 million sequentially to $10 million, annualized at $40 million, with a previous goal of $100 million annualized by year-end [5][9] - **Network Expansion**: Successfully wave-enabled over 1,000 data centers, with wavelengths provisioned in 30 days or less at speeds of 10, 100, or 400 gig [7][8] - **Sales Performance**: Sold approximately 1,000 waves before completing the entire footprint; however, sales were lower than expected due to customer acceptance delays [8][9] - **Future Goals**: Targeting $500 million in revenue with a 25% market share by mid-2028 [9][13] Legacy IP Business - **Growth Trends**: Corporate customer connections in Q3 2025 were lower than pre-Sprint acquisition levels, with a decline in corporate services growth rate from 11% pre-pandemic to 3% currently [17][19] - **Sprint Acquisition Impact**: The Sprint business, which represented 40% of combined revenue, has been declining at an annualized rate of 24.2% since acquisition [18][19] - **On-net vs Off-net**: Post-acquisition, the corporate business shifted from 60% on-net to 49% on-net by revenue, with off-net revenue declining due to customer attrition [19][20] Market Conditions - **Geographic Concentration**: Cogent operates in 1,870 buildings across North America, with a significant decline in occupancy rates from 51 unique tenants pre-pandemic to 38 today [22] - **Corporate Business Headwinds**: The vacancy rate in connected buildings increased from 4% to 17%, impacting corporate business growth [22] Netcentric Business - **Revenue Growth**: Netcentric revenue was $100 million in Q3, up $3 million sequentially, driven by wavelength sales and IPv4 leasing [24][25] - **International Traffic Growth**: Increased traffic in less developed markets has contributed to revenue growth, contrasting with slower growth in developed markets [25] Cost Management and Financial Outlook - **Cost Reductions**: Approximately $220 million in direct costs have been eliminated since acquiring Sprint, with an additional $20 million targeted for reduction [26] - **EBITDA Growth**: Cogent has grown EBITDA for nine consecutive quarters, with a focus on achieving 6%-8% top-line growth to offset the loss of T-Mobile subsidies by 2028 [28][29] - **Debt Management**: The company has paused its dividend to focus on deleveraging, with plans to address $750 million in unsecured notes due in 2027 through various refinancing options [31][33] Strategic Initiatives - **Digital Services Growth**: The company is focusing on Network as a Service (NaaS) and partnerships with tech companies to drive future revenue growth [54][58] - **Hyperscale Connectivity Deals**: Cogent has signed $10 billion in cash upfront deals, with revenue recognition expected to ramp up in 2026 and 2027 [60][62] Future Outlook - **Revenue Inflection**: The company anticipates a revenue inflection point in 2028, driven by growth in digital services and hyperscale connectivity [52][60] - **Long-term Vision**: Aiming for a simplified debt structure and improved operational efficiency post-acquisition of Sprint assets [80][81] Additional Insights - **Customer Experience**: The transition to NaaS is expected to improve customer satisfaction and reduce churn, although market education remains a challenge [56][57] - **Market Position**: Cogent's extensive network infrastructure provides a competitive advantage in meeting the growing demand for fiber connectivity, particularly in the AI sector [66][73]