Cogent Communications Holdings Inc【CCOI】株式ニュース

Cogent Communications Reports First Quarter 2026 ResultsMay 4, 2026 6:59 AM
PR Newswire (US)

Financial and Business HighlightsService revenue was $239.2 million for Q1 2026 and was $240.5 million for Q4 2025.Wavelength revenue increased by 12.3% sequentially from Q4 2025 to $13.6 million for Q1 2026 and increased by 90.8% from Q1 2025.Wavelength customer connections increased by 9.6% sequentially from Q4 2025 to 2,263 connections for Q1 2026 and increased by 71.2% from Q1 2025.On-net revenue increased by 1.0% sequentially from Q4 2025 to $135.6 million for Q1 2026 and increased by 4.6% from Q1 2025.Revenue from leasing IPv4 addresses increased by 3.9% sequentially from Q4 2025 to $18.0 million for Q1 2026 and increased by 24.8% from Q1 2025.EBITDA, as adjusted, was $70.2 million for Q1 2026 and increased by 2.1% from Q1 2025.EBITDA, as adjusted, margin was 29.3% for Q1 2026 and was 27.8% for Q1 2025.IP Network traffic for Q1 2026 increased by 4% from Q4 2025 and increased by 14% from Q1 2025.Cogent approved a quarterly dividend of $0.02 per share for Q2 2026.WASHINGTON, May 4, 2026 /PRNewswire/ -- Cogent Communications Holdings, Inc. (NASDAQ: CCOI) ("Cogent") today announced service revenue of $239.2 million for the three months ended March 31, 2026, a decrease of 0.6% from the three months ended December 31, 2025 and a decrease of 3.2% from the three months ended March 31, 2025.

Foreign exchange rates positively impacted service revenue growth from the three months ended December 31, 2025 to the three months ended March 31, 2026 by $0.3 million and positively impacted service revenue growth from the three months ended March 31, 2025 to the three months ended March 31, 2026 by $3.4 million. On a constant currency basis, service revenue decreased by 0.7% from the three months ended December 31, 2025 to the three months ended March 31, 2026 and decreased by 4.6% from the three months ended March 31, 2025 to the three months ended March 31, 2026.On-net service is provided to customers located in buildings that are physically connected to Cogent's network by Cogent facilities. On-net revenue was $135.6 million for the three months ended March 31, 2026, an increase of 1.0% from the three months ended December 31, 2025 and an increase of 4.6% from the three months ended March 31, 2025.Off-net customers are located in buildings directly connected to Cogent's network using other carriers' facilities and services to provide the last mile portion of the link from the customers' premises to Cogent's network. Off-net revenue was $89.0 million for the three months ended March 31, 2026, a decrease of 4.2% from the three months ended December 31, 2025 and a decrease of 17.0% from the three months ended March 31, 2025.Wavelength revenue was $13.6 million for the three months ended March 31, 2026, an increase of 12.3% from the three months ended December 31, 2025 and an increase of 90.8% from the three months ended March 31, 2025.Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell. Non-core revenue was $1.0 million for the three months ended March 31, 2026, $1.2 million for the three months ended December 31, 2025 and $3.0 million for the three months ended March 31, 2025. GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue. GAAP gross profit increased by 4.0% from the three months ended December 31, 2025 to $55.9 million for the three months ended March 31, 2026 and increased by 66.5% from the three months ended March 31, 2025. GAAP gross margin was 23.4% for the three months ended March 31, 2026, 22.3% for the three months ended December 31, 2025 and 13.6% for the three months ended March 31, 2025.Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as Non-GAAP gross profit divided by total service revenue. Non-GAAP gross profit decreased by 2.0% from the three months ended December 31, 2025 to $110.3 million for the three months ended March 31, 2026 and increased by 0.2% from the three months ended March 31, 2025.Non-GAAP gross margin was 46.1% for the three months ended March 31, 2026, 46.8% for the three months ended December 31, 2025 and 44.6% for the three months ended March 31, 2025.Net cash provided by (used in) operating activities was $14.8 million for the three months ended March 31, 2026, $(6.0) million for the three months ended December 31, 2025 and $36.4 million for the three months ended March 31, 2025.IP Transit Services Agreement
On May 1, 2023, the closing date of the Sprint acquisition, Cogent and T-Mobile USA, Inc. ("TMUSA"), a Delaware corporation and direct subsidiary of T-Mobile US, Inc., a Delaware corporation ("T-Mobile"), entered into an agreement for IP transit services (the "IP Transit Services Agreement"), pursuant to which TMUSA will pay Cogent an aggregate of $700.0 million, consisting of (i) $350.0 million paid in equal monthly installments during the first year after the closing date of the Sprint acquisition and (ii) $350.0 million paid in equal monthly installments over the subsequent 42 months. Amounts paid under the IP Transit Services Agreement were $25.0 million for each of the three months ended March 31, 2025, December 31, 2025 and March 31, 2026.Earnings before interest, taxes, depreciation and amortization (EBITDA), was $45.2 million for the three months ended March 31, 2026, $51.7 million for the three months ended December 31, 2025 and $43.8 million for the three months ended March 31, 2025.EBITDA margin, was 18.9% for the three months ended March 31, 2026, 21.5% for the three months ended December 31, 2025 and 17.7% for the three months ended March 31, 2025. Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted, for cash paid under the IP Transit Services Agreement, was $70.2 million for the three months ended March 31, 2026, $76.7 million for the three months ended December 31, 2025 and $68.8 million for the three months ended March 31, 2025. EBITDA margin, as adjusted for cash paid under the IP Transit Services Agreement, was 29.3% for the three months ended March 31, 2026, 31.9% for the three months ended December 31, 2025 and 27.8% for the three months ended March 31, 2025. Basic and diluted net (loss) per share was $(0.83) for the three months ended March 31, 2026, $(0.64) for the three months ended December 31, 2025 and was $(1.09) for the three months ended March 31, 2025. Total customer connections decreased by 3.2% from March 31, 2025 to 116,809 as of March 31, 2026 and decreased by 0.7% from December 31, 2025. On-net customer connections increased by 1.3% from March 31, 2025 to 87,899 as of March 31, 2026 and decreased by 0.1% from December 31, 2025. Off-net customer connections decreased by 12.7% from March 31, 2025 to 24,014 as of March 31, 2026 and decreased by 2.6% from December 31, 2025. Wavelength customer connections increased by 71.2% from March 31, 2025 to 2,263 as of March 31, 2026 and increased by 9.6% from December 31, 2025. Non-core customer connections were 2,633 as of March 31, 2026, 2,979 as of December 31, 2025 and 5,120 as of March 31, 2025. The number of on-net buildings increased by 105 on-net buildings from March 31, 2025 to 3,605 as of March 31, 2026 and increased by 26 on-net buildings from December 31, 2025.Optical Wave Network
Acquiring the Sprint network has also allowed Cogent to construct a wavelength network using predominantly owned fiber. This enabled Cogent to expand its product offerings to include optical wavelength services. As of March 31, 2026, Cogent was offering optical wavelength services in 1,107 locations in the United States, Mexico and Canada.Quarterly Dividend Approved
On May 1, 2026, Cogent's Board approved a regular quarterly dividend of $0.02 per share payable on June 2, 2026 to shareholders of record on May 18, 2026.The payment of any future dividends and any other returns of capital will be at the discretion of the Board and may be reduced, eliminated or increased and will be dependent upon Cogent's financial position, results of operations, available cash, cash flow, capital requirements, limitations under Cogent's debt indentures and other factors deemed relevant by the Board.Conference Call and Website Information
Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on May 4, 2026 to discuss Cogent's operating results for the first quarter of 2026. Investors and other interested parties may access a live audio webcast of the earnings call in the "Events" section of Cogent's website at www.cogentco.com/events. A replay of the webcast, together with the press release, will be available on the website following the earnings call. A downloadable file of Cogent's "Summary of Financial and Operational Results" and a transcript of its conference call will also be available on Cogent's website following the conference call. About Cogent CommunicationsCogent Communications (NASDAQ: CCOI) is a multinational, Tier 1 facilities-based ISP. Cogent specializes in providing businesses with high-speed Internet access, Ethernet transport, optical wavelength, optical transport and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in 306 markets globally.Cogent Communications is headquartered at 2450 N Street, NW, Washington, D.C. 20037. For more information, visit www.cogentco.com. Cogent Communications can be reached in the United States at (202) 295-4200 or via email at info@cogentco.com.COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIESSummary of Financial and Operational Results

Q1 2025Q2 2025Q3 2025Q4 2025Q1 2026Metric ($ in 000's, except share, per share, customer connections
and network related data) – unaudited

On-Net revenue (13) $129,628$132,331$135,267$134,281$135,568 % Change from previous Qtr.0.7 %2.1 %2.2 %-0.7 %1.0 %Off-Net revenue $107,274$102,177$95,111$92,909$89,023 % Change from previous Qtr.-5.2 %-4.8 %-6.9 %-2.3 %-4.2 %Wavelength revenue (1)$7,119$9,057$10,179$12,097$13,585 % Change from previous Qtr.2.2 %27.2 %12.4 %18.8 %12.3 %Non-Core revenue (2) $3,027$2,682$1,392$1,231$1,011 % Change from previous Qtr.-10.3 %-11.4 %-48.1 %-11.6 %-17.9 %Service revenue – total (13)$247,048$246,247$241,949$240,518$239,187 % Change from previous Qtr.-2.1 %-0.3 %-1.7 %-0.6 %-0.6 %Constant currency total revenue quarterly growth rate – sequential
quarters (3) (13)-1.9 %-1.3 %-2.1 %-0.5 %-0.7 %Constant currency total revenue quarterly growth rate – year over
year quarters (3) (13)-6.7 %-6.0 %-6.6 %-5.7 %-4.6 %Constant currency and excise tax impact on total revenue
quarterly growth rate – sequential quarters (3) (13)-1.6 %-1.2 %-1.8 %-0.8 %-0.5 %Constant currency and excise tax impact on total revenue
quarterly growth rate – year over year quarters (3) (13) -6.6 %-6.3 %-6.4 %-5.3 %-4.3 %Excise Taxes included in service revenue (4)$20,200$19,998$19,188$19,786$19,490 % Change from previous Qtr.-3.6 %-1.0 %-4.1 %3.1 %-1.5 %IPv4 Revenue, included in On-Net revenue $14,413$15,320$17,475$17,323$17,992 % Change from previous Qtr.14.8 %6.3 %14.1 %-0.9 %3.9 %IPv4 Addresses Billed12,879,74913,187,10914,600,97415,274,48815,203,726 % Change from previous Qtr.-1.2 %2.4 %10.7 %4.6 %-0.5 %Corporate revenue (5) $110,686$109,047$105,201$102,817$101,041 % Change from previous Qtr.-2.1 %-1.5 %-3.5 %-2.3 %-1.7 %Net-centric revenue (5) (13)$92,615$97,309$100,288$103,353$105,756 % Change from previous Qtr.-1.1 %5.1 %3.1 %3.1 %2.3 %Enterprise revenue (5) $43,747$39,891$36,460$34,348$32,390 % Change from previous Qtr.-4.1 %-8.8 %-8.6 %-5.8 %-5.7 %Network operations expenses (4) $136,949$136,986$131,107$128,035$128,910 % Change from previous Qtr.-11.5 %0.0 %-4.3 %-2.3 %0.7 %GAAP gross profit (6)$33,571$33,465$49,843$53,742$55,903 % Change from previous Qtr.12.5 %-0.3 %48.9 %7.8 %4.0 %GAAP gross margin (6)13.6 %13.6 %20.6 %22.3 %23.4 %Non-GAAP gross profit (3) (7)$110,099$109,261$110,842$112,483$110,277 % Change from previous Qtr.12.8 %-0.8 %1.4 %1.5 %-2.0 %Non-GAAP gross margin (3) (7)44.6 %44.4 %45.8 %46.8 %46.1 %Selling, general and administrative expenses (8)$66,340$60,766$62,061$60,740$65,094 % Change from previous Qtr.19.0 %-8.4 %2.1 %-2.1 %7.2 %Depreciation and amortization expense$76,038$75,290$60,429$58,422$54,055 % Change from previous Qtr.13.0 %-1.0 %-19.7 %-3.3 %-7.5 %Equity-based compensation expense$8,013$4,664$8,932$4,808$7,563 % Change from previous Qtr.9.1 %-41.8 %91.5 %-46.2 %57.3 %Operating income (loss)$(40,292)$(31,459)$(18,128)$(11,329)$(13,507) % Change from previous Qtr.23.0 %21.9 %42.4 %37.5 %-19.2 %Interest expense (9)$34,015$48,688$43,146$54,135$47,944 % Change from previous Qtr.-25.0 %43.1 %-11.4 %25.5 %-11.4 %Non-cash change in valuation – Swap Agreement (9)$201$(8,911)$223$(9,758)$(4,069)Net loss$(52,042)$(57,807)$(41,544)$(30,781)$(39,542)Basic net loss per common share$(1.09)$(1.21)$(0.87)$(0.64)$(0.83)Diluted net loss per common share$(1.09)$(1.21)$(0.87)$(0.64)$(0.83)Weighted average common shares – basic 47,676,73547,592,83647,603,28747,724,10147,774,617 % Change from previous Qtr.0.3 %-0.2 %0.0 %0.3 %0.1 %Weighted average common shares – diluted47,676,73547,592,83647,603,28747,724,10147,774,617 % Change from previous Qtr.0.3 %-0.2 %0.0 %0.3 %0.1 %EBITDA (3)$43,759$48,495$48,781$51,743$45,183 % Change from previous Qtr.4.6 %10.8 %0.6 %6.1 %-12.7 %EBITDA margin (3)17.7 %19.7 %20.2 %21.5 %18.9 %Cash payments under IP Transit Services Agreement (10)$25,000$25,000$25,000$25,000$25,000EBITDA, as adjusted for payments under IP Transit Services
Agreement (3) (10)$68,759$73,495$73,781$76,743$70,183 % Change from previous Qtr.2.9 %6.9 %0.4 %4.0 %-8.5 %EBITDA, as adjusted for cash payments under IP Transit Services
Agreement, margin (3) (10) 27.8 %29.8 %30.5 %31.9 %29.3 %Net cash provided by (used in) operating activities$36,351$(44,039)$3,100$(5,992)$14,834 % Change from previous Qtr.150.1 %-221.1 %107.0 %-293.3 %347.6 %Capital expenditures$58,088$56,200$36,250$37,031$46,239 % Change from previous Qtr.26.0 %-3.3 %-35.5 %2.2 %24.9 %Principal payments of capital (finance) lease obligations$8,003$8,520$8,791$8,528$13,356 % Change from previous Qtr.-71.4 %6.5 %3.2 %-3.0 %56.6 %Dividends paid $49,133$49,560$49,066$2,304$1,299Gross Leverage Ratio (3) 6.698.658.248.048.02Net Leverage Ratio (3) 6.087.527.447.347.41Gross Leverage Ratio, adjusted for amounts Due from T-Mobile (3)
(14)5.817.747.457.357.40Net Leverage Ratio, adjusted for amounts Due from T-Mobile (3)
(14)5.216.616.656.646.79Gross Leverage Ratio under the Company's Indentures (3)5.866.825.666.136.10Secured Leverage Ratio under the Company's Indentures (3)3.444.203.493.803.79Interest Coverage Ratio under the Company's Indentures (3)2.802.432.622.392.29Customer Connections – end of period (13)

On-Net customer connections 86,78187,40787,76787,94487,899 % Change from previous Qtr.-0.8 %0.7 %0.4 %0.2 %-0.1 %Off-Net customer connections 27,50826,23925,51824,65624,014 % Change from previous Qtr.-5.0 %-4.6 %-2.7 %-3.4 %-2.6 %Wavelength customer connections (1) 1,3221,4691,7502,0642,263 % Change from previous Qtr.18.2 %11.1 %19.1 %17.9 %9.6 %Non-Core customer connections (2) 5,1203,6153,2442,9792,633 % Change from previous Qtr.-11.8 %-29.4 %-10.3 %-8.2 %-11.6 %Total customer connections (13) 120,731118,730118,279117,643116,809 % Change from previous Qtr.-2.1 %-1.7 %-0.4 %-0.5 %-0.7 %Corporate customer connections (5) 45,29544,30743,39142,57941,903 % Change from previous Qtr.-2.3 %-2.2 %-2.1 %-1.9 %-1.6 %Net-centric customer connections (5) (13)61,79562,65963,87564,55165,098 % Change from previous Qtr.-0.7 %1.4 %1.9 %1.1 %0.8 %Enterprise customer connections (5) 13,64111,76411,01310,5139,808 % Change from previous Qtr.-7.7 %-13.8 %-6.4 %-4.5 %-6.7 %On-Net Buildings – end of period

Multi-Tenant office buildings1,8671,8711,8691,8811,875Carrier neutral data center buildings 1,4531,4711,4821,5111,545Cogent data centers10110110010099Cogent edge data centers7986868786Total on-net buildings3,5003,5293,5373,5793,605Total carrier neutral data center nodes1,6681,6751,6861,7151,744Wave enabled locations8839389961,0681,107Square feet – multi-tenant office buildings – on-net1,015,459,5201,017,918,8261,017,433,2161,025,139,4851,024,433,714Total Technical Buildings Owned (11)482482482482482Square feet – Technical Buildings Owned (11)1,603,5691,603,5691,603,5691,603,5691,603,569Network – end of period

Intercity route miles – Leased 79,86773,07572,95573,21873,769Metro route miles – Leased 30,78831,29731,38832,63433,036Metro fiber miles – Leased 90,69692,63193,33896,66397,916Intercity route miles – Owned 21,88321,88321,88321,88321,883Metro route miles – Owned 1,7041,7041,7041,7041,704Connected networks – AS's8,2408,0858,0437,6597,630Headcount – end of period (12)

Sales force – quota bearing (12)629628617590568Sales force – total (12)820820802777749Total employees (12)1,8991,8891,8821,8331,795Sales rep productivity – units per full time equivalent sales rep
("FTE") per month 3.84.84.64.14.1FTE – sales reps 605588592585559 (1) In connection with the acquisition of the Wireline Business, Cogent began to provide optical wavelength services and optical transport services over its fiber network. (2) Consists of legacy services of companies whose assets or businesses were acquired by Cogent.(3) See Schedules of Non-GAAP measures below for definitions and reconciliations to GAAP measures.(4) Network operations expense excludes equity-based compensation expense of $490, $506, $570, $319 and $319 in the three-month periods ended March 31, 2025 through March 31, 2026 respectively. Network operations expense includes excise taxes, including Universal Service Fund fees, of $20,200, $19,998, $19,188, $19,786 and $19,490 in the three-month periods ended March 31, 2025 through March 31, 2026, respectively. (5) In connection with the acquisition of the Wireline Business, Cogent classified revenue and customer connections as follows:$12.9 million of the Wireline Business monthly recurring revenue and 17,823 customer connections as corporate revenue and corporate customer connections, respectively,$6.5 million of monthly recurring revenue and 5,711 customer connections as net-centric revenue and net-centric customer connections, respectively, and$20.1 million of monthly recurring revenue and 23,209 customer connections as enterprise revenue and enterprise customer connections, respectively.Conversely, Cogent reclassified $0.3 million of monthly recurring revenue and 387 customer connections of legacy Cogent monthly recurring revenue to enterprise revenue and enterprise customer connections, respectively. (6) GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue.(7) Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Management believes that non-GAAP gross profit and non-GAAP gross margin are relevant measures to provide investors. Management uses them to measure the margin available to the company after network service costs, in essence a measure of the efficiency of the Company's network.(8) Excludes equity-based compensation expense of $7,523, $4,158, $8,362, $4,489 and $7,244 in the three-month periods ended March 31, 2025 through March 31, 2026, respectively. (9) Through February 5, 2026, Cogent was party to an interest rate swap agreement (the "Swap Agreement") that has the economic effect of modifying the fixed interest rate obligation associated with its Senior Secured 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate ("SOFR") so that the interest payable on Cogent's 2026 Notes effectively became variable based on overnight SOFR. Interest expense includes payments of $9,880 and $4,078 for the three-month periods ended December 31, 2025 and March 31, 2026, respectively, related to the Swap Agreement. Under GAAP, changes in the valuation of the Swap Agreement are classified with interest expense in the condensed consolidated statements of comprehensive (loss) income.(10) Includes cash payments under the IP Transit Services Agreement, as discussed above, of $25.0 million for the three months ended March 31, 2025, and$25.0 million for the three months ended June 30, 2025,$25.0 million for the three months ended September 30, 2025,$25.0 million for the three months ended December 31, 2025, and$25.0 million for the three months ended March 31, 2026.(11) In connection with the acquisition of the Wireline Business, Cogent acquired 482 technical buildings. Cogent converted 52 of those buildings to Cogent Data Centers and 87 into Cogent Edge Data Centers.(12) In connection with the acquisition of the Wireline Business, Cogent hired 942 total employees, including 75 quota bearing sales employees and 114 sales employees.As of March 31, 2025, there were 618 employees remaining from the original Wireline Business employees.As of June 30, 2025, there were 603 employees remaining from the original Wireline Business employees.As of September 30, 2025, there were 588 employees remaining from the original Wireline Business employees.As of December 31, 2025, there were 569 employees remaining from the original Wireline Business employees.As of March 31, 2026, there were 559 employees remaining from the original Wireline Business employees.(13) Net-centric revenue under the CSA (predominantly on-net revenue) was$0.7 million for the three months ended March 31, 2025,$1.1 million for the three months ended June 30, 2025,$0.4 million for the three months ended September 30, 2025,$0.4 million for the three months ended December 31, 2025, and$0.5 million for the three months ended March 31, 2026.Net-centric customer connections under the CSA were:1,478 as of March 31, 2025,1,595 as of June 30, 2025,1,666 as of September 30, 2025,1,676 as of December 31, 2025, and1,676 as of March 31, 2026.(14) Amounts Due from T-Mobile include 1) Due from T-Mobile, IP Transit Services Agreement, current portion, 1) Due from T-Mobile, IP Transit Services Agreement, long-term portion and 3) Due from T-Mobile, Purchase Agreement, all amounts net of their applicable discounts. These amounts totaled $265,090, $244,821, $224,167, $203,120 and $181,670 as of March 31, 2025 to March 31, 2026, respectively.NM Not meaningfulSchedules of Non-GAAP MeasuresEBITDA, EBITDA, as adjusted for cash payments made to the Company under the IP Transit Services Agreement, EBITDA margin and EBITDA, as adjusted for cash payments made to the Company under the IP Transit Services Agreement, margin
EBITDA represents net cash flows provided by operating activities plus changes in operating assets and liabilities, cash interest expense and cash income tax expense. Management believes the most directly comparable measure to EBITDA calculated in accordance with generally accepted accounting principles in the United States, or GAAP, is net cash provided by operating activities. The Company also believes that EBITDA is a measure frequently used by securities analysts, investors, and other interested parties in their evaluation of issuers. EBITDA, as adjusted for cash payments under the IP Transit Services Agreement with T-Mobile, represents EBITDA and cash payments made to the Company under the IP Transit Agreement. EBITDA margin is defined as EBITDA divided by total service revenue. EBITDA, as adjusted for cash payments made to the Company under the IP Transit Agreement margin is defined as EBITDA, as adjusted for cash payments made to the Company under the IP Transit Agreement, divided by total service revenue.The Company believes that EBITDA, EBITDA, as adjusted for cash payments made to the Company under the IP Transit Services Agreement, EBITDA margin and EBITDA as adjusted for cash payments made to the Company under the IP Transit Services Agreement margin are useful measures of its ability to service debt, fund capital expenditures, pay dividends and expand its business. The company believes its EBITDA, as adjusted for cash payments made to the Company under the IP Transit Services Agreement, is a useful measure because it includes recurring cash flows stemming from the IP Transit Services Agreement that are of the same type as contracted payments under commercial contracts. The measurements are an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. EBITDA, EBITDA, as adjusted for cash payments made to the Company under the IP Transit Agreement, EBITDA margin and EBITDA as adjusted for cash payments made to the Company under the IP Transit Agreement margin are not recognized terms under GAAP and accordingly, should not be viewed in isolation or as a substitute for the analysis of results as reported under GAAP, but rather as a supplemental measure to GAAP. For example, these measures are not intended to reflect the Company's free cash flow, as they do not consider certain current or future cash requirements, such as capital expenditures, contractual commitments, and changes in working capital needs, interest expenses and debt service requirements. The Company's calculations of these measures may also differ from the calculations performed by its competitors and other companies and as such, their utility as a comparative measure is limited.EBITDA, and EBITDA, as adjusted cash payments made to the Company under the IP Transit Services Agreement, are reconciled to net cash provided by operating activities in the table below.
Q1
2025Q2
2025Q3
2025Q4
2025Q1
2026($ in 000's) – unaudited

Net cash provided by (used in) operating activities$36,351$(44,039)$3,100$(5,992)$14,834Changes in operating assets and liabilities$(26,614)$42,244$8,941$7,795$(13,375)Cash interest expense and income tax expense34,02250,29036,74049,94043,724EBITDA$43,759$48,495$48,781$51,743$45,183PLUS: Cash payments made to the Company under IP Transit Services Agreement25,00025,00025,00025,00025,000EBITDA, as adjusted for cash payments made to the Company under IP Transit Services Agreement$68,759$73,495$73,781$76,743$70,183EBITDA margin17.7 %19.7 %20.2 %21.5 %18.9 %EBITDA, as adjusted for cash payments made to the Company under IP Transit Services Agreement, margin27.8 %29.8 %30.5 %31.9 %29.3 % Constant currency revenue is reconciled to service revenue as reported in the tables below.Constant currency impact on revenue changes – sequential periods($ in 000's) – unauditedQ12025Q22025Q32025Q42025Q12026Service revenue, as reported – current period$247,048$246,247$241,949$240,518$239,187Impact of foreign currencies on service revenue 542(2,419)(938)191(253)Service revenue - as adjusted for currency impact (1)$247,590$243,828$241,011$240,709$238,934Service revenue, as reported – prior sequential period$252,291$247,048$246,247$241,949$240,518Constant currency revenue increase (decrease)$(4,701)$(3,220)$(5,236)$(1,240)$(1,584)Constant currency revenue percent increase (decrease)-1.9 %-1.3 %-2.1 %-0.5 %-0.7 %

(1)Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior sequential period. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. Constant currency impact on revenue changes – prior year periods($ in 000's) – unauditedQ12025Q22025Q32025Q42025Q12026Service revenue, as reported – current period$247,048$246,247$241,949$240,518$239,187Impact of foreign currencies on service revenue 1,258(1,507)(1,806)(2,659)(3,420)Service revenue - as adjusted for currency impact (2)$248,306$244,740$240,143$237,859$235,767Service revenue, as reported – prior year period$266,168$260,443$257,202$252,291$247,048Constant currency revenue increase $(17,862)$(15,703)$(17,059)$(14,432)$(11,281)Constant currency percent revenue increase-6.7 %-6.0 %-6.6 %-5.7 %-4.6 %

(2)Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the comparable prior year period. The Company believes that disclosing year over year revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. Revenue on a constant currency basis and adjusted for the impact of excise taxes is reconciled to service revenue as reported in the tables below.Constant currency and excise tax impact on revenue changes – sequential periods($ in 000's) – unauditedQ12025Q22025Q32025Q42025Q12026Service revenue, as reported – current period$247,048$246,247$241,949$240,518$239,187Impact of foreign currencies on service revenue542(2,419)(938)191(253)Impact of excise taxes on service revenue 760202832(598)296Service revenue - as adjusted for currency and excise taxes impact (3)$248,350$244,030$241,843$240,111$239,230Service revenue, as reported – prior sequential period$252,291$247,048$246,247$241,949$240,518Constant currency and excise taxes revenue increase (decrease)$(3,941)$(3,018)$(4,404)$(1,838)$(1,288)Constant currency and excise tax revenue percent increase (decrease)-1.6 %-1.2 %-1.8 %-0.8 %-0.5 %

(3)Service revenue, as adjusted for currency impact and the impact of excise taxes, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior sequential period and adjusting for the changes in excise taxes recorded as revenue between the periods presented. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies and excise taxes on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for the impact of foreign currency and excise taxes, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. Constant currency and excise tax impact on revenue changes – prior year periods($ in 000's) – unauditedQ12025Q22025Q32025Q42025Q12026Service revenue, as reported – current period$247,048$246,247$241,949$240,518$239,187Impact of foreign currencies on service revenue1,258(1,507)(1,806)(2,659)(3,420)Impact of excise taxes on service revenue 349(816)5861,174710Service revenue - as adjusted for currency and excise taxes impact (4)$248,655$243,924$240,729$239,033$236,477Service revenue, as reported – prior year period$266,168$260,443$257,202$252,291$247,048Constant currency and excise taxes revenue increase$(17,513)$(16,519)$(16,473)$(13,258)$(10,571)Constant currency and excise tax percent revenue increase-6.6 %-6.3 %-6.4 %-5.3 %-4.3 %

(4) Service revenue, as adjusted for currency impact and the impact of excise taxes, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior year period and adjusting for the changes in excise taxes recorded as revenue between the periods presented. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies and excise taxes on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for the impact of foreign currency and excise taxes, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. Non-GAAP gross profit and non-GAAP gross margin Non-GAAP gross profit and non-GAAP gross margin are reconciled to GAAP gross profit and GAAP gross margin in the table below.
Q1 2025Q2 2025Q3 2025Q4 2025Q1 2026($ in 000's) – unaudited

Service revenue total$247,048$246,247$241,949$240,518$239,187Minus - Network operations expense including equity-
based compensation and depreciation and
amortization expense 213,477212,782192,106186,776183,284GAAP Gross Profit (5)$33,571$33,465$49,843$53,742$55,903Plus - Equity-based compensation – network
operations expense490506570319319Plus – Depreciation and amortization expense$76,038$75,290$60,429$58,422$54,055Non-GAAP Gross Profit (6)$110,099$109,261$110,842$112,483$110,277GAAP Gross Margin (5)13.6 %13.6 %20.6 %22.3 %23.4 %Non-GAAP Gross Margin (6)44.6 %44.4 %45.8 %46.8 %46.1 %

(5)GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue.

(6)Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Management believes that non-GAAP gross profit and non-GAAP gross margin are relevant measures for investors, as they are metrics that management uses to measure the margin and amount available to the Company after network service costs, in essence, these are measures of the efficiency of the Company's network. Gross and Net Leverage RatiosGross leverage ratio is defined as total debt divided by the trailing 12 months EBITDA, as adjusted for cash payments under the IP Transit Services Agreement. Net leverage ratio is defined as total net debt (total debt minus cash and cash equivalents) divided by the last 12 months EBITDA, as adjusted for cash payments under the IP Transit Services Agreement. Gross leverage, adjusted for amounts Due from T-Mobile, is defined as total debt minus amounts due from T-Mobile divided by the last 12 months EBITDA, as adjusted for cash payments under the IP Transit Services Agreement. Net leverage, adjusted for amounts Due from T-Mobile, is defined as total net debt (total debt minus cash and cash equivalents) minus amounts due from T-Mobile divided by the last 12 months EBITDA, as adjusted for cash payments under the IP Transit Services Agreement. Cogent's gross leverage ratios and net leverage ratios are shown below.($ in 000's) – unauditedAs of
March 31,
2025As of
June 30,
2025As of
September 30,
2025As of
December 31,
2025As of
March 31,
2026Cash and cash equivalents & restricted cash$183,970$306,725$226,294$205,112$179,265Debt

Capital (finance) leases – current portion24,68526,52324,99026,11223,967Capital (finance) leases – long term 543,852578,634576,851597,239604,981Senior Secured 2032 Notes
600,000600,000600,000600,000Senior Secured 2026 Notes500,000

Secured IPv4 Notes 206,000380,400380,400380,400380,400Senior Unsecured 2027 Notes750,000750,000750,000750,000750,000Total debt2,024,5372,335,5572,332,2412,353,7512,359,348Total net debt1,840,5672,028,8322,105,9472,148,6392,180,083Trailing 12 months EBITDA, as adjusted for cash
payments from the IP Transit Services Agreement 302,636269,968282,888292,785294,202Gross leverage ratio6.698.658.248.048.02Net leverage ratio6.087.527.447.347.41Total amounts Due from T-Mobile$265,090$244,821$224,167$203,120$181,670Total debt, adjusted for amounts Due from T-Mobile1,759,4472,090,7362,108,0742,150,6312,177,678Total net debt, adjusted for amounts Due from T-Mobile1,575,4771,784,0111,881,7801,945,5191,998,413Gross leverage ratio, adjusted for amounts Due from T-Mobile5.817.747.457.357.40Net leverage ratio, adjusted for amounts Due from T-Mobile5.216.616.656.646.79 Ratios under the Company's indenturesConsolidated Leverage Ratio is defined in the Company's Indentures as total debt divided by Consolidated Cash Flow (as defined in the Company's Indentures) for the most recently completed period of four consecutive fiscal quarters of the Company (the "Reference Period"), subject to certain adjustments provided for in the Company's Indentures. Secured Leverage Ratio is defined in the Company's Indentures as total secured debt divided by Consolidated Cash Flow for the Reference Period, subject to certain adjustments provided for in the Company's Indentures. Net leverage ratio is presented as total net debt (total debt minus cash and cash equivalents) divided by the last 12 months Consolidated Cash Flow. Net leverage ratio is not a defined term in the Company's Indentures. Fixed Charge Coverage Ratio is defined in the Company's Indentures as Consolidated Cash Flow for the Reference Period divided by Fixed Charges (as defined in the Company's Indentures) for the Reference Period, which largely consist of interest expense, subject to certain adjustments provided for in the Company's Indentures. Cogent's ratios are shown in the table below.($ in 000's) – unauditedAs of
March 31,
2025As of
June 30, 2025
(2)As of
September 30,
2025 (2)As of
December 31,
2025 (2)As of
March 31,
2026 (2)Cash and cash equivalents & restricted cash$165,676$195,165$136,513$135,410$127,334Debt

Capital (finance) leases – current portion24,68526,52324,99026,11223,967Capital (finance) leases – long term 543,852578,634576,851597,239604,981Letters of credit124130130130130Senior Secured 2026 Notes500,000

Senior Secured 2032 Notes
600,000600,000600,000600,000Senior Unsecured 2027 Notes750,000750,000750,000750,000750,000Total debt1,818,6611,955,2871,951,9711,973,4811,979,078Total net debt1,652,9851,760,1221,815,4581,838,0711,851,744Total secured debt1,068,6611,205,2871,201,9711,223,4811,229,078Consolidated Cash Flow (2)310,345286,881344,739322,154324,405Consolidated Leverage Ratio for the Reference Period5.866.825.666.136.10Net leverage ratio (1) 5.336.145.275.715.71Secured Leverage Ratio for the Reference Period (2)3.444.203.493.803.79Fixed Charges for the Reference Period (2)110,704118,290131,688134,836141,394Fixed Charge Coverage Ratio for the Reference Period (2)2.802.432.622.392.29

(1)Net leverage ratio is not a defined term under the Company's Indentures.(2) Consolidated Cash Flow as defined in the Company's $600.0 million Secured 2032 Notes issued in June 2025, includes cash payments under the IP Transit Services Agreement with TMUSA. Cash payments under the IP Transit Services Agreement with TMUSA for the for the most recently completed period of four consecutive fiscal quarters of the Company were $100.0 million. Ratios under the Company's $600 million 2032 Secured Notes

Q2 2025Q3 2025Q4 2025Q1 2026Consolidated Cash Flow under the Indentures286,881344,739322,154324,405PLUS: Cash Payments under IP Transit Services Agreement with TMUSA100,000100,000100,000100,000Consolidated Cash Flow - $600.0 million Secured 2032 Notes386,881444,739422,154424,405Consolidated Leverage Ratio for the Reference Period - $600.0 million Secured 2032 Notes5.054.394.674.66Net leverage ratio - $600.0 million Secured 2032 Notes (1) 4.554.084.354.36Secured Leverage Ratio for the Reference Period - $600.0 million 2032 Notes3.122.702.902.90Fixed Charges for the Reference Period118,290131,688134,836141,394Fixed Charge Coverage Ratio for the Reference Period - $600.0 million 2032 Notes3.273.383.133.00 Cogent's SEC filings are available online via the Investor Relations section of www.cogentco.com or on the Securities and Exchange Commission's website at www.sec.gov.COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSAS OF MARCH 31, 2026 AND DECEMBER 31, 2025(IN THOUSANDS, EXCEPT SHARE DATA)

March 31,2026
December 31, 2025

(Unaudited)

Assets

Current assets:

Cash and cash equivalents
$140,265
$148,515Restricted cash

39,000

56,597Accounts receivable, net of allowance for credit losses of $5,271 and $4,610, respectively

91,096

88,050Due from T-Mobile, IP Transit Services Agreement, current portion, net of discount of $8,695 and $10,401,
respectively

91,305

89,599Prepaid expenses and other current assets

68,610

67,820Total current assets

430,276

450,581Property and equipment:

Property and equipment

3,696,974

3,642,906Accumulated depreciation and amortization

(1,964,092)

(1,921,832)Total property and equipment, net

1,732,882

1,721,074Right-of-use leased assets

303,051

310,523IPv4 intangible assets

458,000

458,000Other intangible assets, net

10,813

11,251Deposits and other assets

31,179

34,834Due from T-Mobile, IP Transit Services Agreement, net of discount of $869 and $2,255, respectively

65,798

89,412Due from T-Mobile, Purchase Agreement, net of discount of $3,548 and $4,006, respectively

24,567

24,109Total assets
$3,056,566
$3,099,784Liabilities and stockholders' equity

Current liabilities:

Accounts payable
$36,095
$30,571Accrued and other current liabilities

112,345

109,582Current maturities, operating lease liabilities

53,665

54,576Finance lease obligations, current maturities

23,967

26,112Total current liabilities

226,072

220,841Senior secured 2032 notes, net of unamortized debt costs of $1,957 and $2,020, respectively

598,043

597,980Senior unsecured 2027 notes, net of unamortized debt costs of $1,034 and $1,236, respectively, and
discounts of $3,633 and $4,344, respectively

745,333

744,420Secured IPv4 notes, net of debt costs of $8,339 and $8,863, respectively

372,061

371,537Operating lease liabilities, net of current maturities

263,698

269,753Finance lease obligations, net of current maturities

604,981

597,239Deferred income tax liabilities

321,724

333,294Other long-term liabilities

28,816

28,568Total liabilities

3,160,728

3,163,632Commitments and contingencies:

Stockholders' deficit:

Common stock, $0.001 par value; 75,000,000 shares authorized; 50,077,663 and 50,062,158 shares issued and
outstanding, respectively

50

50Additional paid-in capital

651,538

643,256Accumulated other comprehensive (loss) income

(6,327)

1,428Accumulated deficit

(749,423)

(708,582)Total stockholders' deficit

(104,162)

(63,848)Total liabilities and stockholders' deficit
$3,056,566
$3,099,784 COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSFOR THE THREE MONTHS ENDED MARCH 31, 2026 AND MARCH 31, 2025(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Three Months EndedMarch 31, 2026
Three Months EndedMarch 31, 2025

(Unaudited)
(Unaudited)Service revenue
$239,187
$247,048Operating expenses:

Network operations (including $319 and $490 of equity-based compensation expense, respectively,
exclusive of depreciation and amortization shown separately below)

129,229

137,439Selling, general, and administrative (including $7,244 and $7,523 of equity-based compensation
expense, respectively)

72,338

73,863Depreciation and amortization

54,055

76,038Total operating expenses

255,622

287,340Gains on lease terminations and other

2,928

—Operating loss

(13,507)

(40,292)Interest expense, including change in valuation interest rate swap agreement

(43,875)

(34,216)Interest income – IP Transit Services Agreement

3,093

4,686Interest income (loss) – Purchase Agreement

458

425Interest income (loss) and other, net

2,852

(865)Loss before income taxes

(50,979)

(70,262)Income tax benefit

11,437

18,220Net loss
$(39,542)
$(52,042)

Comprehensive loss:

Net loss
$(39,542)
$(52,042)Foreign currency translation adjustment

(7,755)

11,752Comprehensive loss
$(47,297)
$(40,290)

Net loss per common share:

Basic net loss per common share
$(0.83)
$(1.09)Diluted net loss per common share
$(0.83)
$(1.09)Dividends declared per common share
$0.02
$1.005

Weighted-average common shares - basic

47,774,617

47,676,735

Weighted-average common shares - diluted

47,774,617

47,676,735 COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE THREE MONTHS ENDED MARCH 31, 2026 AND MARCH 31, 2025(IN THOUSANDS)

Three Months EndedMarch 31, 2026
Three Months EndedMarch 31, 2025

(Unaudited)
(Unaudited)Cash flows from operating activities:

Net loss
$(39,542)
$(52,042)Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization

54,055

76,038 Amortization of debt costs and discounts

1,501

1,192 Amortization of discounts, due from T-Mobile, IP Transit Services & Purchase Agreements

(3,551)

(5,111) Equity-based compensation expense (net of amounts capitalized)

7,563

8,013 Gains on lease terminations and other

(2,928)

— Deferred income taxes

(11,570)

(18,554)Changes in operating assets and liabilities:

Accounts receivable

(3,046)

8,979 Prepaid expenses and other current assets

(790)

2,261 Accounts payable, accrued liabilities and other long-term liabilities

9,501

17,903 Deposits and other assets

3,641

(2,328)Net cash provided by operating activities

14,834

36,351Cash flows from investing activities:

Cash receipts - IP Transit Services Agreement – T-Mobile

25,000

25,000Purchases of property and equipment

(46,239)

(58,088)Net cash used in investing activities

(21,239)

(33,088)Cash flows from financing activities:

Dividends paid

(1,299)

(49,133)Proceeds from exercises of stock options

—

121Principal payments of finance lease obligations

(13,356)

(8,003)Net cash used in financing activities

(14,655)

(57,015)Effect of exchange rates changes on cash

(4,787)

9,806Net decrease in cash, cash equivalents and restricted cash

(25,847)

(43,946)Cash, cash equivalents and restricted cash, beginning of period

205,112

227,916Cash, cash equivalents and restricted cash, end of period
$179,265
$183,970 Except for historical information and discussion contained herein, statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. The statements in this release are based upon the current beliefs and expectations of Cogent's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including the impact of our acquisition of the Wireline Business, including our difficulties integrating our business with the acquired Wireline Business, which may result in the combined company not operating as effectively or efficiently as expected; transition services required to support the acquired Wireline Business and the related costs continuing for a longer period than expected; transition related costs associated with the acquisition; the COVID-19 pandemic and the related government policies; delays in the delivery of network equipment or optical fiber; loss of key right-of-way agreements; future economic instability in the global economy, including the risk of economic recession, recent bank failures and liquidity concerns at certain other banks or a contraction of the capital markets, which could affect spending on Internet services and our ability to engage in financing activities; the impact of changing foreign exchange rates (in particular the Euro to USD and Canadian dollar to USD exchange rates) on the translation of our non-USD denominated revenues, expenses, assets and liabilities; legal and operational difficulties in new markets; the imposition of a requirement that we contribute to the US Universal Service Fund on the basis of our Internet revenue; changes in government policy and/or regulation, including net neutrality rules by the United States Federal Communications Commission and in the area of data protection; cyber-attacks or security breaches of our network; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements and right-of-way agreements on favorable terms; our reliance on a few equipment vendors, and the potential for hardware or software problems associated with such equipment; the dependence of our network on the quality and dependability of third-party fiber and right-of-way providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; our ability to make payments on our indebtedness as they become due and outcomes in litigation and outcomes in litigation as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year December 31, 2025 and our Form 10-Q for the quarterly periods ended March 31, 2025, June 30, 2025, September 30, 2025 and March 31, 2026. Cogent undertakes no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.

View original content to download multimedia:https://www.prnewswire.com/news-releases/cogent-communications-reports-first-quarter-2026-results-302760414.htmlSOURCE Cogent Communications Holdings, Inc.

Original: Cogent Communications Reports First Quarter 2026 Results

Industry Spotlight: Cogent’s Dave Schaeffer Looks Ahead
http://www.telecomramblings.com/2011/03/industry-spotlight-cogents-dave-schaeffer-looks-ahead/#more-10446
March 11th, 2011 by Rob Powell

Here for a Q&A today is the CEO of Cogent, Dave Schaeffer, who doesn’t really need much of an introduction. Since the dot com bubble Cogent has followed a rather vocal and independent path, fusing a wholesale IP backbone, a metro-fiber fed enterprise data business, and simple but aggressive pricing. He didn’t make many friends along the way, actually earning the title ‘the most hated man in telecom’ from Forbes in a profile a few years ago. But two weeks ago, Cogent Communications (NASDAQ:CCOI, news, filings) posted a solid quarterly profit after several years of steady, disciplined growth, announced a new stock buyback effort, and appears poised to join TW Telecom and AboveNet on the list of competitive fiber operators who have made it through to the other side. With no further ado:

TR: Cogent has been steadily marching toward a sustainable profitability. Does this mean you will have greater flexibility and be able to loosen the reins a bit, or will it be business as usual? How are you putting your cashflow to work?

DS: I think it’s business as usual. We’ve been pretty consistent in producing free cash from operations since mid ’06. Over the course of the past four years we’ve used that cash for different things. First we bought back a significant amount of stock in ’06, ’07, and early ’08. We then shifted in mid-2008 and started buying back our convertible debt at a deep discount, and we really bought back all we could get our hands on. Then in late ’08 we shifted gears yet again and started accelerating our footprint expansion, buying a lot more dark fiber both in terms of metro routes and longhaul routes. In late ’08, ’09 and ’10 we almost doubled the footprint of the network, giving us a much larger addressable network.

TR: Will you be continuing that network expansion?

DS: We do expect that the footprint expansion will slow, just because we’ve reached most of the markets that make sense. Today we’re in about 160 markets across North America and Europe. There are probably about another 15 or so that fit our criteria. In terms of countries we’re up to 30, with the addition of Greece, we’ll add another 6 or 7 countries and then we’ll have optimized our footprint against our addressable market. We’ve been pretty consistent in adding buildings to the network at about 120-130 per year, and we expect that to continue.

TR: On your earnings call, you mentioned the purchase of fiber into Greece, do you have any more details? And what other European markets do you have your eye on?

DS: We bought fiber from Sofia in Bulgaria down to Thessaloniki. We do anticipate extending to Athens eventually, just as there are some other gaps in our network. For instance, in Poland we go to Warsaw but not to Gdansk, we do not yet go to Lithuania, Latvia, Russia, Turkey, or Macedonia – we consider these holes in our addressable market for longhaul extensions. And then obviously we’ll continue to evaluate metro markets to determine which other cities fit our criteria.

TR: Do you have any plans to enter Asia?

DS: I don’t think so at this time for several reasons. First, the regulatory climate is not conducive in most of those countries to an open internet. Second, there is a lack of infrastructure, i.e. dark fiber, available for purchase. And third, while these are rapidly growing markets, they still are relatively small. They will continue to grow in scale, and at some point that may make us reevaluate our decision. But I think at this time we’re going to be focused on the markets that generate the majority of the traffic – North America and Europe.

TR: Historically, Cogent has purchased many assets as part of its growth. Last year, we saw a surge in consolidation amongst fiber operators, but Cogent did not participate. What’s different this time, and are you actively looking at such opportunities?

DS: There are three things that are different. First, there is a large number of suppliers that are willing to sell us dark fiber in areas we may not have ample fiber or any fiber, so we are able to expand our footprint through the acquisition of fiber IRUs. Second, a lot of our acquisitions were driven not only by the need to acquire the fiber but also the active equipment to light it, i.e. the routers and transport gear. Most of our needs were satiated at the right price points in the first wave. What’s been for sale lately is not equipment but rather infrastructure. And third, and most important, is price. Cogent exists today in large part because of our very disciplined price structure in terms of what we would pay for assets. We reviewed a lot of the transactions in the market and the prices that the sellers were looking for, and we concluded that we were not going to participate, as our prices were far lower than what the sellers were expecting to get. That could change in the future, but for right now I think it’s fair to say we’ve been priced out of the market.

TR: For your corporate-centric business, you have been adding buildings at a very steady clip. What sort of buildings have you been focusing on?

DS: In terms of multi-tenant office buildings, we’re in a little over 1,100 buildings today and we see that number continuing to grow at least another couple hundred buildings. Our multitenant business is almost exclusively a North American business simply because we have such stringent criteria on the type of building we go after. We’re looking for very large buildings that are tightly clustered in a central business district and have lots of unique tenants in them. So we won’t go after either smaller buildings or single tenant buildings, and there is a somewhat finite universe of those types of buildings we seek. But we think that at least for the next few years we’ll be able to continue to grow the multitenant or corporate footprint at the same rate as we have historically.

TR: Do you foresee expanding your focus to other types of buildings at some point, or is this the only type you are aiming at?

DS: It really is all we’re aiming at. We’re very focused on our return on incremental capital invested. We think that based on our product set and our pricing model, smaller buildings or buildings with less tenants in them will not provide us an adequate return on capital. Today in our multitenant office footprint, we have about 9.6 customer connections per building. We think we will continue to grow both by adding additional buildings but also over time doubling that penetration.

TR: You have also been adding off-net connections rapidly lately, are these to the same types of buildings in advance of bringing them on-net?

DS: Our off-net buildings actually look very different than our on-net buildings. We have today approximately 3,520 off-net customers in slightly over 3,400 buildings. Our typical off-net building is about 25,000 square feet and would have about 3 opportunities in it. For off-net, we are typically first selling someone on-net services where they would have a branch office in a building that will probably never meet our return on capital criteria. So we will then offer them an off-net service.

TR: For this off-net connectivity, have you been participating in the new Ethernet exchanges or do you prefer direct NNI’s?

DS: It’s actually through direct purchases usually through the ILEC. We do not participate in the Ethernet exchanges, and quite honestly I don’t see a lot of value in them for us. We have direct NNIs with the major carriers in each of the markets in which we operate. Then we provide either TDM or Ethernet services based on both customer requirements and relative costs. The exchanges are designed to help someone who purchases a relatively low amount of connections per market or is trying to purchase from a large number of providers. While we have off-net purchases from over 180 suppliers, the vast majority of our off-net purchases do come from the ILEC. To justify the cost of buying an interface into an Ethernet exchange for that one-off chance that someone other than the ILEC would have it at a lower price and we could not deal with them directly – it just doesn’t seem to make a lot of economic sense for us.

TR: Do you anticipate alternative metro providers will start to make up a greater share of your off-net connectivity?

DS: I hope that becomes the case, although I’m very doubtful it will. The reason is that many of those other parties have the same economic constraints that we have given the cost to build into those facilities versus the revenue opportunity that is generated. For the ILEC, they have ubiquitous facilities within their territory and can generally justify that as capital avoidance as they are decommissioning copper plant and also because their extension costs are relatively low. For competitive carriers I think it is going to be more challenging. There will be some opportunities, but most smaller buildings will continue to have facilities based services only from the ILEC for the foreseeable future.

TR: Thank you for talking with Telecom Ramblings!