Cogent(US:CCOI)2025-12-09 20:22Cogent Communications Conference Call Summary Company Overview - Company: Cogent Communications (NasdaqGS:CCOI) - Date: December 09, 2025 Key Points Dividend Reduction - Cogent reduced its dividend by 98% to $0.02 per share due to increased leverage from the Sprint acquisition and negative revenue growth from that business [2][3] - The company had grown its dividend for 52 consecutive quarters prior to this reduction [2] Financial Performance - EBITDA has grown for nine consecutive quarters post-Sprint acquisition, despite a 2.4% average decline in top-line revenue [3][4] - EBITDA margin improved from approximately 1% post-acquisition to 20%, with potential to reach 30% when including T-Mobile subsidy payments [4] - Capital expenditures (CapEx) decreased by $20 million sequentially, stabilizing around $100 million annually [4] Wavelength Revenue Growth - Wavelength revenue, which constitutes about 4% of total revenues, grew 93% year-over-year and 14% sequentially [4][5] - Investors expected a faster growth rate in wavelength revenue [5] Deleveraging Strategies - Cogent plans to improve its leverage profile through EBITDA growth and divesting surplus assets, including 24 identified data centers [6][9] - The company has a total of 186 data centers and aims to monetize excess fiber and IP address space [9][11] - Cogent owns approximately 38 million IPv4 addresses, with a leasing income projected to increase from $12 million in 2022 to over $70 million by the end of 2025 [12] Market Position and Sales Strategy - The company has seen a shift in its sales mix, with 79% of sales being 100 gig wavelengths, compared to the market average of 40% [22] - Cogent's average revenue per user (ARPU) for wavelengths is around $2,000, with potential increases as the mix shifts towards higher capacity waves [25] Legacy Business Performance - The legacy Cogent business accounts for 70% of revenue, with the Netcentric segment growing at about 8% year-over-year [26][27] - The acquired Sprint business is declining at approximately 24% year-over-year, primarily affecting off-net corporate segments [29][30] Investor Misunderstandings - Investors may misunderstand the complexity of accounting related to the Sprint acquisition and the distinction between revenue growth from acquired versus organically growing customer bases [31][32] - The wavelength business is new for Cogent, and growth may not be as rapid as anticipated due to the broader market dynamics [32] Additional Insights - The company has paused its buyback program to avoid signaling that all capital is being used for buybacks instead of dividends [3] - There is a significant surplus of dark fiber and IP addresses that Cogent plans to monetize, with ongoing negotiations for sales and leases [10][12] - The company is exploring wholesale agreements for IP addresses to accelerate revenue generation [14][18] This summary encapsulates the key discussions and insights from the Cogent Communications conference call, highlighting the company's financial strategies, market positioning, and growth opportunities.