good morning and welcome to the cogent communication holding sport quarter and school year 2025 earnings conference call as a reminder this conference call is being recorded and it will be available for replay at www.cogent.com a transcript of this conference call will be posted on cogent's website when it becomes available cogent summary of financial and operational results attached to express release can be downloaded from the cogent website i would I would like to turn the call over to Sir Dave Schaefer, Chairman and Chief Executive Officer of Cogent Communications Holdings. Please go ahead.

Hey, thank you and good morning to everyone. Welcome to our fourth quarter 2025 and full year 2025 conference call. I'm Dave Schaefer, Cogent CEO, and with me on today's call is Tad Weed, our Chief Financial Officer. I'd like to highlight a few key events and significant matters in a quarter. I'd like to be able to go through these metrics to help you understand better our business. We are continuing to increase our margins. Our increase in gross margin and EBITDA margins have been driven by cost reductions and a rotation to more profitable on-net products. In the third quarter of 2023, the first full-quarter Cogent was combined with Sprint Wireline revenues. Our combined revenues by connection type for the third quarter versus this quarter have changed materially. Our on-net revenues were 47% of our revenues in the third quarter of 2023. Our total on-net revenues as a percentage of revenues has increased from 47% of revenues in the third quarter of 2023 to 61% of revenues this quarter. Our off-net revenues were 48% of our total revenues in the third quarter of 2023, immediately after the combination of Sprint and Cogent. Our off-net revenues as a percentage of our total revenues have decreased from 48% of revenues down to 39% of total revenues this quarter. And our non-core revenues were 5% of total revenues in the third quarter of 2023. Our non-core revenues, as a percentage of our total revenues, have decreased to less than 1% of our revenues this quarter. I'd like to take a moment and outline our progress in our wavelength sales. At year end, we're offering wavelength services in 1,068 locations, all capable of 10 gigabit, 100 gigabit, and 400 gigabit services, with provisioning intervals of approximately 30 days. As of today, we have actually increased that service footprint to 1,096 locations. Our wavelength revenue for the quarter was $12.1 million, a 74% year-over-year increase compared to the comparable quarter in 2024. Our sequential wavelength revenue growth accelerated and increased by 19%. That is better than the 12% sequential increase in Q3 over Q2. Our wavelength customers increased by 18% sequentially to 2,064 connections at the end of the quarter. Our wavelength revenue for the full year 2025, which was the first full year we were selling wavelength services across our footprint, was $38.5 million, an increase of 100% from the 2024 number. Our wavelength customers during that period increased by 85%. As of the end of the quarter, we had sold wavelengths in 518 locations locations compared to 454 locations at the end of Q3. We continue to anticipate capturing 25% of the highly concentrated wavelength market in North America. Now for a few comments on margins. Our EBITDAs adjusted for the quarter increased by $3 million to $76.7 million. Our EBITDAs adjusted margins for the quarter increased sequentially by 140 basis points to 31.9%. Our increased margins continue to come from our cost reductions as well as our product optimization. Our EBITDAs adjusted for the full year 2025 was $55.6 million. Our EBITDA is adjusted then adding back the payments under the T-Mobile transit agreement. Our decrease in EBITDA, as adjusted, was as a result of the $104.2 million reduction in our IP transit payments from T-Mobile and a reduction of $21.4 million for other reimbursable Sprint acquisition costs that we incurred in 2024. There were no Sprint acquisition costs in full year 2025. The $104.2 million reduction in scheduled payments had $21.4 million reduction in these acquisition costs more than offset the organic growth of $70 million in Cogent's EBITDA or EBITDA Classic for full year 2025. Our EBITDA Classic for 2025 was $192 million.8. For the full year of 2024, it was $122.8 million. Our EBITDA as adjusted margins were 30% for the full year 2025, 25, down from the 33.6 for the full year 2024 because of the reductions that I just previously mentioned. Our EBITDA classic margins, however, for full year 2025 were 19.8% up from the 11.9% for full year 2024, or an improvement of approximately 840 basis points on a year-over-year basis. Under our IP Transit Agreement with T-Mobile, we will continue to receive an additional 23 monthly payments of $8.3 million per month until November of 2027. There are further cash payments related to lease obligations we assumed at closing of at minimum $28 million. This $28 million payment is to be made by T-Mobile in four equal monthly payments from December of 2027 through March of 2028. Now for a comment on our improvement and leverage. We have refined our capital allocation priorities and strengthened our financial flexibility and accelerated our de-levering strategy. Our leverage ratios have improved. Our gross debt leverage as adjusted for amounts due from T-Mobile for the last 12 months EBITDA as adjusted ratio was 7.35 as compared to 7.45 in the previous quarter. Our net debt ratio was 6.64 in Q4 compared to 6.65 in Q3 of 2025. We believe that the amounts due from T-Mobile under our transit and purchase agreement should be considered and calculated by leverage ratios. We believe that these amounts essentially represent both long-term and short-term cash and are discounted appropriately on our balance sheet. And due to T-Mobile's credit rating and payment history, we are confident that these payments will continue to be made in a timely manner. T-Mobile pays us $25 million a quarter through the fourth quarter of 2027 under this IP services agreement. The monthly payments from T-Mobile under the IP transit agreement reduces from the balances that are due each month as they are received. Now for a couple of comments on our improved IPv4 leasing activity. Our IPv4 leasing revenue increased 44% year-over-year to $64.5 million for full year 2025. We are currently leasing 15.3 million addresses at year-end. This is an increase of 2.2 million incremental addresses or 17% on a year-over-year basis. We have titled to 37.8 million IPv4 addresses. Our capital expenditures for the last half of 2025, once our data center modernization program had been completed, was $73.3 million, as compared to $114.3 million for the first half of 2025. This $41 million decrease was due to the completion of a significant amount of reconfiguration work in our Sprint-acquired facilities. We have converted these facilities into data centers in the first six months of 2025 as well as the last six months of 2024. 24. We have converted a total of 125 facilities. At year end, we are providing facilities and providing services in 1,715 carrier neutral data centers as well as the 187 cogent data centers. The Cogent Data Centers have an aggregate capacity of 213 megawatts of installed and available power. Now, as many of you know, we have intended to monetize and sell 24 of these facilities that we view as surplus. We acquired these facilities through the acquisition of Sprint, And we intend to monetize them through either outright sale or leasing on a wholesale basis. The non-binding letter of intent we mentioned on our last call was not finalized due to a change in the original terms, not in price, but a requirement by the purchaser for cogent to provide a portion of the purchase price in terms of owner financing, which we found unacceptable. We reverted to some of our backup agreements and our active discussions with multiple parties or multiple offers across a broad set of these data centers. We do expect several of these to result in multi-site acquisition offers. Now for a moment about our leverage and balance sheet strategy. Our 2027 June unsecured notes of $750 million are still roughly 18 months from maturity. But we have begun receiving proposals to refinance these notes. We intend to complete a refinancing transaction for new secured notes of $750 million as soon as the make-hold period expires in June of this year. Now for our long-term goals. We anticipate our revenue growth to continue to improve and be in the 6% to 8% range. We expect our rate of EBITDA margin to actually moderate to the roughly 200 basis points a year that we will be able to deliver over a multi-year period. You know, the nearly 800 basis points that we delivered this year was due to some extraordinary cost savings, and while we will continue to deliver these results, we do expect the rate of margin expansion to moderate. Our revenue and EBITDA guidance are meant to be multi-year goals and not intended to either be quarterly or even annual guidance. Now I'd like to turn the call over to TAD, provide some further detail and provide our safe harbor language. TAD will also give a further breakout of the trends and the revenues acquired from the Sprint base versus the Cogent Classic base since our acquisition in 2023. I know this has been an area of focus of investors, and we have been able to disaggregate those revenues and now present them with clear trends and metrics. With that, we'll then open the call up for questions and answers. Taz.

Thank you, Dave, and good morning to everyone. This earnings conference call includes forward-looking statements. These forward-looking statements are based upon our current intent to leave and expectations. These forward-looking statements and all other statements that may be made on this call are risks and uncertainties, and actual results may differ materially. Please refer to our SEC filings for more information on the factors that could cause actual results to differ. Cogent undertakes no obligation to update or revise our forward-looking statements. If we use non-GAAP financial measures during this call, you will find these reconciled for the corresponding GAAP measurement in our earnings release and overall comments on results and revenues. So our total revenue for the quarter was $40.5 million and $975.8 million. Our total revenue for the quarter declined sequentially by $1.4 million or by $0.8 million. This was an improvement from the $4.3 million or $1.8 million. Monthly revenue increased from excluding a change in USF revenues increased from November to December. This month-to-month total revenue increased from December 2025 to January 2020. There was a negative FX impact on our quarter sequentially revenues of – before the quarter, we experienced a 2.2 million sequential decline in off-net revenues. Our on-net revenues, including on-net wave revenues, increased by 0.9 million or 0.6 percent, and our non-core revenues decreased, and now those revenues have declined only. Sequential wavelength revenue growth, which is on net, accelerated to 18.8 percent from

gross margin.

Our gross margin for the – our gross margin increased sequentially by 100 basis points. Gross margin for – gross margin for full year 2025, 20 basis points, 45 points EBITDA. Our EBITDA, not including payments under the IP transit agreement for the quarter, increased sequentially by 3 million to 51, and our EBITDA margin increased by 130 basis points. Our EBITDA for the full year, not including the IP Transit Agreement or Sprint, increased by 70 million to 192.8 million from 122.8 million to 24, and the EBITDA margin for this year increased by 790 basis points from 11.9% to 19 points. We analyze and classify our revenues into four network connection types and three customer types. Our four network connection types are on-net, off-net, wavelength, and non-core. And our three customer types are net-centric customers. Dave mentioned we'll provide some information on Sprint Wireline acquired revenue and Cogent Classic revenue. We have been hesitant to separately disclose our revenue performance sprint wireline business and our cogent classic business once the operations have been – however, we believe that the following analysis will be beneficial in understanding some of the changes in our total combined revenues. The substantial changes in the acquired sprint wireline revenue base have masked the unrealistic business. So, in May 2023, when we closed the transaction, The Sprint Wireline revenue base had a run rate of $39.4 million per month, or $118 million per quarter. This acquired revenue base has decreased from that $118 million per quarter at the acquisition date to down to $43 million for this quarter. That's a $75 million quarterly revenue decline related to the Sprint Wireline revenue base or a 64% decline since the deal closed. At deal closing, our Cogent Classic revenue run rate was $155 million per quarter. This quarterly revenue base has increased by 27% or by $42 million from that $155 million prior to close to $197 million for this quarter. Additionally, our Cogent Classic revenues increased sequentially by 1.5% from the third quarter of this year, increased year-over-year by 3.1% from the fourth quarter of 2024, and increased by 2.3%. Consolidated revenue declines have been largely attributed to the reduction in the acquired corporate and enterprise revenues from Sprint. At closing, the Sprint Wireline revenues – percent of our total revenues, and that percentage has materially dropped from 42 percent down to only 18 percent of our total revenues, 42.7 percent of our revenues this quarter, and 43.9 percent for the year. Our quarterly corporate revenues do career over year and sequentially by 2.3 of the year. At the closing of our acquisition of Sprint Wireline in May 2023, the Sprint Wireline corporate revenues were 30% of our Sprint Wireline acquired corporate customers now represent only 10%. Our Sprint Wireline acquired corporate revenue base has decreased from a run rate of $13 million per month or $39 million per quarter at closing to a run rate of $2.7 million per month or $8.1 million per quarter at year-end 2025. The same analysis for net-centric. Our total net-centric business continues to increase and benefit from the growth in video traffic, activity related to artificial intelligence, streaming, IPv4 leasing, and wavelength sales. Our net-centric business was for the year. Our quarterly net-centric revenues increased by 10.4% year-over-year and sequentially by For the year, our total net centric revenues increased. At the closing of our acquisition of Sprint Wireline, the Sprint Wireline net centric customers represented 20% centric revenues. Applied net centric customers now are representing on Sprint Wireline acquired net centric customer revenue base has decreased from a run rate of $6 million per month or $18 million per quarter at closing to a current run rate of $2.9 million per month or $8.7 million per quarter at year-end. Lastly, the enterprise business. Our total enterprise business was 14.3% of our revenues this quarter and 15.8% of our revenues for the year. Quarterly enterprise revenue decreased by 24.7% year-over-year and sequentially by 5.8%. primarily due to reduction in the acquired non-core enterprise and off-net low-margin enterprise. For the year, total enterprise revenues declined. At the closing of our acquisition, the Sprint wireline represented virtually 100% of our new line. The Sprint wireline acquired enterprise revenue base has decreased from a run rate of $20 million per month or $60 million per quarter at closing, to a current run rate of $8.8 million per month or $26.4 million per quarter at year-end 2025. These substantial changes in the acquired wireline revenue base have masked the underlying performance. Your analysis on revenue by customer connection network type. On-net revenue. We serve our on-net customers in 3,579 total on-net buildings. For the year, we increased our on-net buildings by a total of 126 on-net buildings, similar to prior years. Our total on-net revenue, including on-net wave revenues, was $146.4 million for the quarter, a year-over-year increase of 7.8%, and a sequential increase of 0. Our total on-net revenues, including on-net wavelength revenues, increased as a percentage of our total revenue by 400 basis points to 58.4% for this year, from 54.4% for off-net revenue. Our low margin off-net revenue was $92.9 million for the quarter. That was a year-over-year decrease of 17.9% and it's 0.3%. Our off-net revenue results are impacted by the migration of certain off-net customers to on-net and the continued grooming and termination of acquired low-margin off-net contracts. Our total off-net revenues decreased to 40.7% of our revenues for this year from 43.8% for full year 2020. Some comments on pricing, our average price per megabit for our installed base decreased sequentially by 12% to $0.14 and by 34% year-over-year, essentially in line with the storage per megabit for our new customer contracts was $0.06, sequential decline of 18% and 40%. Our on-net IPRP was $509. Our off-net IPRP was $1,234. Our wavelength ARPU was $2,114. Our IPV4 ARPU was $0.30 per address. Our churn rates improved sequentially. Our on-net and off-net churn rates improved from last quarter. Our on-net unit monthly churn rate this quarter was 1.2% compared to 1.3%. Our off-net unit monthly churn rate was 1.9%, compared to 2.1% last quarter. And our wavelength monthly churn rate has been less than 0.5%, so relatively insignificant. Our year-over-year IP network traffic growth accelerated for the quarter. Our IP network traffic for the quarter increased sequentially by 4% and by 10% year-over-year. And for the total year, our traffic increased by 9%. Sales rep productivity. Our sales rep productivity was 4.1 units this quarter compared to 4.6 last quarter and 3.5 in the fourth quarter of 2024. That's compared to our long-term sales rep productivity average of 4.4. Foreign currency, our revenue earned outside of the United States was about 20% of our revenues this quarter, similar to prior quarters. Based upon the average euro and Canadian conversion rates so far this quarter, so the first quarter of 2026, we estimate that the FX conversion impact on central revenues would be positive, about 0.4 million, and year over year, more significant, about 3.5. Customer concentration, our revenue and customer base is not highly concentrated. Our top 25 customers were 17% of our revenues this quarter, similar to prior. CapEx, our CapEx was $37 million this quarter and $187.6 million for the year. And principal payments on capital leases were $8.5 million for the quarter and 30. Combine, those amounts have declined year over year. Comments on debt and debt ratios, our total gross debt at par, including $623.4 million of finance lease obligations under long-term IRUs was $2.4 billion at year end. Our net debt, total net debt of our cash and our $203.1 million due from T-Mobile at year end was $1.9. Our leverage ratio as calculated under our more restrictive covenants under our unsecured 750 million 2027 notes indenture was 6.13, the secured leverage ratio was 3.8, and the fixed coverage ratio was 2.38. The definition of consolidated cash flow, similar to EBITDA, under our $600 million secured 2032 notes indenture, includes cash payments in the definition and determination of consolidation. Payments under our IP transit agreement were $100 million for the last 12 months, so that's a calculation. Our leverage ratio, as calculated under the $600 million, was $7 million. Our secured leverage ratio was 2.9, and lastly fixed coverage was 3.0. Bad debt in day sales, our day sales outstanding with 30 days at year end, the same as last quarter, and our bad debt expense was less than 1% of our revenues for the quarter and for the year. And with that, I will turn the call back over to Dave.

Hey, thanks, Chad. I'd like to highlight a few of the strengths of our network, our customer base, and our sales force. Now for some details around our net-centric performance. We continue to be a direct beneficiary of a number of trends in the industry, whether it be artificial intelligence or streaming activity. At year end, we're able to sell wavelength services in 1,068 data centers across North America with a provisioning interval of approximately 30 days. At year end, we're selling IP services globally in 57 countries and 1,902 data centers. At year end, we were directly connected to 7,659 networks. That is the largest number of directly connected networks of any service provider on the internet. 22 of these were peers, and the remaining 7,637 networks were, in fact, cogent transit customers. Now for some details around our sales force. We remain focused on sales force productivity and are disciplined about managing out underperformers. Our sales force turnover rate was 5.4% a month and a quarter, down from a peak turnover rate rate of 8.7% during the height of the pandemic, and also below our historical average turnover rate of 5.7% of the sales force per month. At year-end, we had a total of 590 quota-bearing reps. Our sales force included 289 sales professionals focused entirely on the net-centric market, 289 sales professionals focused on the corporate market, and finally, 12 sales professionals focused on the enterprise market. In summary, we have made significant progress in a number of areas. We've improved our revenue trajectory and performance and have returned to sequential revenue growth, which we expect to continue. We are improving our margins and growing our EBITDA due to our diligence and cost production and our focus in selling profitable on-net services. Over 80% of our sales in the fourth quarter of 2025 were for on-net services. We have a clear plan to refinance our 2027 $750 million unsecured notes with a new longer duration $750 million secured note offering. We are actively working to monetize some of the acquired Sprint facilities, which will further accelerate our de-levering and allow us to resume a more aggressive return of capital program to our equity holders. We are effectively have now completed the integration of Sprint and Cogent's network into a unified network and business. We have converted all of the intended Sprint switch sites that we intend to convert into data centers, this program is material complete and will result in a continued reduction in our capital intensity. We are enthusiastic and optimistic about our wavelength business to add to our product portfolio. Our wavelength services are differentiated due to the uniqueness of the routes, the breadth of our footprint are efficient provisioning and aggressive pricing. The reliability that we deliver is unparalleled. We have since inception offered superior services, a broad footprint of revenue-rich locations, expedited provisioning, and market-leading disruptive pricing. That is why Cogent continues to be a market leader in the products that we sell. With that, I'd like to open the floor up for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. At this time, I would like to give an instruction. In order to ask a question, please press star followed by the number one on your telephone keypad. And if you would like to withdraw your question, simply press star one again. And our first question comes from the line of Chris Scholl with QBS. Please go ahead.

Dave, you had previously talked about returning to sequential revenue growth while sustaining sequential EBITDA growth each quarter. Can you just update us how you're thinking about total company revenues in EBITDA for 2026 as that sprint mix continues to fall? And as we think about the Waves business scaling in 2026, any guardrails you can share on the number of connections or revenues you believe are achievable based on what you're seeing in the business right now. Thank you.

Yeah, hey, thanks for the questions, Chris. So as we mentioned, we are not in the habit of giving specific quarterly or annual guidance, but I do believe that after the significant runoff in the Sprint-acquired revenues, as Tad pointed out, 64% of the revenues that we acquired two and a half years ago have And during that period, the cogent revenues, which represented 57% of the combined company, had grown at 27%. As a result of that, we have had now about 10 sequential quarters of revenue growth. We will be back to positive revenue growth on a quarterly basis from this point forward. And we anticipate that the annual rate of growth on average over a multi-year period will be in that 6% to 8% range. We also have a small amount of further cost reductions that will contribute to margin expansion. But the primary driver of margin expansion going forward will continue to be the revenue midshift and the focus on on-net services. You know, 80% of our sales in the quarter were on-net. We have improved the base from 47% on net immediately after closing to 61%. We think that percentage will continue to improve and allow us to achieve that at minimum 200 basis point rate of margin expansion. You know, the reality is we did nearly 800 basis points last year. That is probably not sustainable over a multi-year period, but we do have some tailwinds there. And then for your question around wave, you know, we have the largest North American wave footprint. We are beginning to gain credibility with customers. We saw an acceleration in our revenue recognition and installations. We expect those trends to continue. And because our wavelength products are virtually all on net, they are significant contributors to our margin expansion. Another way to kind of look at, you know, the markets that we operate in. In our on-net multi-tenant footprint, we today have about a 35 percent market share. That means we can continue to grow there, but, you know, it is harder because we already have over a third of the customers as cogent customers. In the net centric market for IP services, we are the largest provider globally and have 25 percent market share. We will continue to gain share and grow that business. But again, you know, with 25 percent share, it becomes incrementally more difficult. And what's encouraging to us about wavelengths is the fact that we have less than 2% market share in North America. We are now establishing our credibility with 518 sites now having actual reference customers in them and nearly 1,100 sites wave-enabled. we think that our rate of wavelength growth will accelerate and help us try that kind of 80-20 mix in incremental business.

Okay, thanks, Chris. Our next question comes from the line of Gregory Williams with TV Calvin. Please go ahead.

Thanks for taking our questions. Two, if I may. First, in the Waze business, we mentioned before that the goal is to get the Waze funnel to about $10,000. Is the idea to get the funnel to $10,000, and it kind of stays in that range because you install the backlog as it comes in, or do you expect the funnel to grow from there? And second on data centers, you mentioned the contract changes that pushed out the LOI for the two data center assets mentioned on 3Q call. Is the expectation this transaction will still close? And if so, is the $144 million a taxable event, or is there some sort of tax yield from the Sprint deal?

Yeah, let me take those in reverse order. On the LOI that we announced last quarter, the counterparty came back to us and looked for us to provide more than 50% of the agreed to purchase price in owner financing. Since we had a number of other interested parties who had submitted backup offers on those two facilities, as well as a broader set of facilities, we decided to terminate that agreement at our choice and then re-engage with some of those parties. We are far along in those negotiations and hope to be able to announce something soon, and that announcement may be for a broader set of assets. Now to the tax consequences, I'll let Tad touch on that.

So as a reminder, we paid only $1 for the strength of business. So the tax basis is essentially the assumed liabilities, which is minimal. However, we have material NOLs this year from the tax bill, and given the bonus depreciation deduction, we expect to, we don't think.

And now, Sam, I'll touch on your Waves question. You know, while we were in the process of enabling the footprint, we felt it was critical to give funnel KPIs to show expressions of interest. by customers. We have tried to be clear with investors that we do not give funnel data routinely for our other products, and we're treating Wavelengths now as any other product. Now we do, in our investor presentation, typically show both our on-net and off-net conversion rates for the previous quarter. We intend to continue to do that. Our funnel is continuing to grow, but we will not be reporting specific numbers, but we do anticipate with the footprint that we now have and the credibility that we are earning with existing customers, we are starting to see a larger percentage of their wave opportunities being shown to us for bid. And as a result of that, we will close more and see further acceleration in the waves business.

Our next question comes from the line of Sebastiano Petty with J.P. Morgan. Please go ahead.

Hi, thanks for taking the question. Dave, just a quick follow-up on the waves business there. Could you update us on the level of the installed but not yet billed balance in the quarter? Did that grow off of the third quarter? Because I think last earnings probably talked about maybe a few hundred waves had been installed but not yet billed. And so what is the progress there? And then I'll have a follow-up.

Yeah. Hey, Sebastiano. So two points. First of all, in the quarter, we actually saw the unit number of waves improve, which is an indication that we were eating into that backlog. But we also have been building an additional backlog. And I would say that the install but not yet build base is comparable this quarter to where it was at the end of third quarter.

Got it. That's helpful. And then I guess maybe just help us think about back to the data centers to some extent. I mean, I think you did mention that there were some other data centers that had been in active discussions last quarter. And so while the LOI that you spoke of on the third quarter that's kind of now been terminated, what was the progress on some of the other, I guess, remaining data centers that were in active discussions? Did those progress? And I guess maybe help us think about as you look at your debt refinancing and the stack later this year, I mean, yes, you talked about trying to perhaps refinance with $750 million of secured. I mean, is there some level of assumed cash proceeds from asset sales anticipated in the intervening period as well, which probably helps, you know, maybe reduce the prevailing interest rate you might get at that time?

Yeah. So, really, three different questions. The first one is, some of the backup offers on the two facilities that we had mentioned previously cover those facilities and others, so some parties were not particularly interested in moving forward without those facilities potentially being included. So it was not a one-for-one, meaning that there was a backup just for the two facilities that were under LOI. And our view was that while there was no difference of opinion on price, we felt that we would be better served with an all-cash purchase rather than one that had us taking more than 50 percent of the purchase price in the form of a secured note against the assets. In our refinancing, we are not assuming that there will be proceeds from the data center sales, although I do think there will be some proceeds. They are not baked into the point that I made around the timing of the refinancing. You know, our plan is to refinance the unsecured notes with secured notes, dollar for dollar, no increase or decrease in aggregate phase value, and do that in a way that allows us to avoid paying the make-hole, which would be due in any time between now and mid-June of about $13 million. The final point I will make on that is that the proceeds for the data center sale would be reflected as cash on our entire balance sheet. But the proceeds do not go into cogent group, which is the borrower group of both the secured and unsecured debt. We may elect to contribute some of that cash to group, but we're well within the coverage ratios, both in terms of secured and total debtiveness and also in debt service coverage. So there's no requirement for us to contribute that capital, but it would be available at an unrestricted sister entity, Cogent Infrastructure, and therefore could be used to either inject that capital into Cogent Group, the borrower, or dividend back to Cogent Holdings, which can then be used for the benefit of shareholders.

Thank you, David. Our next question comes from the line of Frank Luton with Raymond James. Please go ahead.

Great. So on the data center, I think you'd originally kind of focused on, you know, $9 or $10 million per megawatt. I mean, what do you think the market is for that now? And why not maybe try and lease those out and then get a multiple on that value? And then what additional room do you have on pricing and maybe leasing additional IPv4 licenses?

Hey, Frank. Let me take those, again, in reverse order. In terms of IPv4 leasing, we saw a material acceleration in our leasing, but a lower price as we did to wholesale transactions of large blocks. We are continuing both on a retail and wholesale strategy. Today, we're about 46% of our addresses are leased, and approximately 4% of our addresses are allocated to customers at no cost. This is nothing new. It's been part of our strategy to win business since, you know, Cogent's inception. But we do still have half of our address space that is sitting fallow. We have greatly improved the marketability of that address space by being able to deploy RPKI or additional security features across those addresses, which have made them more desirable to counterparties. And we anticipate continuing to see growth in our IPv4 leasing business. The 44% year-over-year growth in that business, again, was extraordinary. I'm not sure we can repeat that, but we will continue to see further growth. Now to the data centers, you know, I think when we established a go-to-market strategy in the spring of 24 and announced that we were going to begin the capital investment to convert these facilities, we looked at both public trading comps as well as transactions And the private market, if anything, over the past year, data center space has become more scarce and valuations have improved. Now we are fully conscious of the fact that our data centers are repurposed switch sites and not purpose-built campuses, which are different and attract a different customer base. We have done a minimal amount of leasing and have been focused mostly on the sales process. I think we feel that based on the number of sites that are in active discussion and a number of counterparties that we will absolutely be monetizing through sale, a significant portion of the footprint, and in terms of exact price per megawatt, we are not going to disclose that because that would impact our ability and maximize value through these negotiations. But as Tad pointed out, other than the capital that we've invested, We have no real basis in these assets, and in fact, because the assets sit at cogent infrastructure, they represent a negative EBITDA cost that's not burdening the borrower cogent group, but is a drag on the entire complex. And by selling these data centers, we both get the cash proceeds as well as a reduction in operating expenses.

Thank you very much.

Our next question comes from the line with Brandon Nispol with KeyBank Capital Markets. Please go ahead.

All right. Thanks for taking the question. And, you know, I appreciate the analysis on the Sprint Revenue vs. Coaching Classic. I wanted to understand and ask a few questions there. First, maybe just can you help us understand how you came up with that analysis? Because I think in the past, you've said it's sort of difficult or impossible to sort of delineate between the two businesses once you integrated. Second, you know, what changed versus your expectations? I think, Dave, when you closed that acquisition, you said you'd probably, you know, be at more of a run rate of $350 million versus the $190 million annualized run rate that you gave us today. And then what do you think the bottom is? What do you think that business does

in terms of revenue in 2026? Thanks. I'll take those again in reverse order. One, I think that business is continuing to deteriorate both based on the nature of the customers and the discipline that we have applied to ensuring that the services we sell have an adequate margin. While we realize that the off-net enterprise customer base is inherently less profitable, in fact, even after a diligent effort of trying to bring enterprise business on net, We have only been able to get to an 88% off net and 12% on net mix because many of these enterprises operate globally across a footprint that is just not economic to bring on net. And therefore, we're going to be saddled with that lower margin portion of our revenue stream. But we do intend to make sure that the margins are adequate. We have virtually completed the burn off of the non-core products and the vast majority of the undesirable revenue. But with that said, we're still experiencing significant monthly and quarterly sequential degradation in that business. You know, I had projected the 10.9% rate of decline that we were seeing from Sprint. we thought that we could maintain that rate of decline and migrate customers to more profitable products. What we, in fact, found was that many of those customers actually intended to go away independent of our acquisition at an accelerating rate. And then that was further compounded by the discipline that we applied. You know, I think it will continue to decline. We will continue to report on it. Now, in terms of why we did this and how, it was a very arduous and manual task. We had to go into the nearly 1,300 acquired customers and look at every individual order on an order-by-order basis. It was a very manual process, but I do believe based on concerns I was hearing from investors that this was an extremely important metric that they cared about, and we then basically invested what was effectively a full-time person to do this analysis. We will be able to do this going forward, and I think it gives an investor a better lens on how Cogent's business is performing versus the acquired business, as well as the mix shift that we are focused on and being more on net. You know, the way to improve our cash flow going forward is growth in top line, but growth in top line of more profitable business. And, you know, the 80% on net that we sold in Q4 is actually better than we did the quarter before we acquired Sprint. So, in Q1 of 2023, we actually only were 76% on and 24% off. So, this focus on on net is going to be a significant driver of margin expansion.

I'll just add one thing to the complexity. So when we acquired the business under the TSA, T-Mobile was billing the customers to their billing system. Incredible effort to bring all of those customers to November of 2020. Bifurcating that billing on R was complicated.

Understood. And if I could just follow up with one quick one, where would you estimate that EBITDA contribution of the Sprint business is today? Thank you very much.

I think it's close to zero but slightly positive. but still far below our aggregate margins. It's probably in the 0% to 5% range, but we are working on improving that, which does include, in some cases, price increases.

Sorry. The next question comes from the line of Nick Delveo with Moffitt Matheson. Please go ahead.

Hey, morning, guys. A couple questions on the data on our front. You know, Dave, you were explicit that the LOI fell apart because of the demand to help you finance it. I recall that one of the due diligence items that the counterparty needed to complete was confirming power availability from the utilities. Was that availability confirmed?

It was confirmed by that party, and we have now made the data available to the backup providers to go through the same confirmation process but the reason why we did not move forward with the previous LOI was not a negotiation on price they got comfortable with both the power availability and title to the actual land which were their two big concerns and they just came back and tried to have us provide them financing, even though when we executed the LOI, they had assured us that they had proof of funds and the wherewithal to pay all cash. They were just trying to magnify their returns through owner financing.

Got it. Are you able to share when the LOI fell apart? And if you do have, you know, new deals in hand soon, as you suggested, you know, should we expect a press release to announce those? Or would you disclose those on your next earnings call or some other, you know, a conference presentation or something?

You know, I think we would probably announce it in a standalone announcement. And I do think we anticipate something, you know, in the next couple of months. That's probably as specific as I can be, but, you know, unless it was, you know, a day or two before the earnings call, I think we would probably announce it separately. And then to when the LOI fell apart, it was fairly recent. There was a negotiation. They had made the request. We went back and, you know, we're trying to keep them moving forward under the original terms. But eventually, earlier this year, we became convinced that they were not going to move forward unless we provided the financing.

Okay. And then can I ask a couple about the legacy cogent versus legacy sprint revenue splits? So it looks like, you know, you're talking about a $42 million growth in quarterly legacy cogent revenue from the time of the deal closing to today. It looks like over that time, your quarterly IPv4 revenue is up about $9 million. Waves are now at about $12 million. So that would imply that about half the revenue growth was from those two line items, and about half came from, you know, call it the core products that you focused on pre-deal. Is that a fair way to think about it? And is it correct to assume that the T – okay, yeah, okay, good. And the T-Mobile CSA revenue, is that in the Sprint bucket?

No, it is not. That was revenue that did not exist previously and was a drag to our revenue. You know, I guess it was about 400,000 for the quarter last quarter, and I think at peak it was almost 6 million. So that was the services we were providing to T-Mobile that we had previously never provided, And it was not to a Sprint customer, it was to T-Mobile, but they have been able to reduce their reliance on our paid services by about 93, 94%. But that remaining 400,000 is in there. So, in fact, the underlying cogent revenue growth probably would have been a little better if we had excluded the CSA both initially and today.

Okay, got it. That's helpful. And if I can squeeze in one more quick one about the IPv4 leasing revenue. So, the revenue is down a little bit quarter over quarter despite the address at least being up noticeably. Can you just talk about the dynamics there?

It was actually pretty simple. One of the parties that took the large wholesale block had a small retail block with us, and it was the timing of when we terminated that retail agreement and converted it to wholesale in conjunction with a much larger purchase.

Great. Thanks, Dave.

Hey, thanks, Dan. Our next question comes from the line of Michael Rawlings with CD. Please go ahead.

Thanks. And good morning. Dave, I was curious if you could be more specific on the cost base. I think in the past, you described that there's some duplicative costs that the company is incurring during this integration. How much of those are left and the timing of those savings? And then can you also share with us what the burn rate is for the data center portfolio that

you're looking to monetize? Thanks. Yeah. Two very different questions. So, first of all, we have achieved the vast majority of the increased cost savings that we had targeted. So, if you remember, the initial number was 220. We then increased that number to 240. And we probably have achieved over 230 of that 240 million in cost savings. So, there is a small tail, but it is not material. Secondly, we have incurred incremental expenses associated with integration activities. Those will continue throughout this year. They peaked at about an annual run rate of $60 million or about $5 million a month. Today, they're down to probably closer to $3 million a month, but there is still monies being spent on various integration optimization programs, but we do anticipate those ending by the end of the year. And then to the final question, which is the burn associated with the infrastructure that we acquired from T-Mobile. So, the infrastructure business, which includes the data centers and the physical fiber network, has a negative EBITDA of about $140 million. We have partially offset that because the IPV4 securitization sits under infrastructure and generates about $60 million of EBITDA. So the infrastructure silo of Cogent's balance sheet is about negative $80 million of EBITDA, roughly 20%. percent of that is associated with the data centers, and we're looking to sell a significant portion of that footprint, probably at least 50 percent of it.

And sorry, that 20 percent associated with the data centers? Is that 20 percent?

20 percent of the 140 million of negative costs associated with the SPRINT assets. You know, these are primarily in three buckets. They are real estate taxes, personal property taxes, and right-of-way fees. You know, we got the actual network for a dollar with no revenue. We now are completing the repurposing of that, and as we add high margin, the margins accrued We accrued a group, but we can fund those losses over at infrastructure through our ability to move money out of the borrower group through holdings and back down to infrastructure. In fact, that's how we've been funding those to date, using our restricted payments capacity. And we do have about $350 million of accumulated, unused restricted payments capacity at the borrower.

Thanks, and let me just follow up real quick with two other items. First, if you look at the corporate business as the heritage cogent side of the equation, Can you share with us a little bit more detail about what's driving this heritage revenue change over the last couple of years and if there's any inflection in trend there? And the same, you know, for NetCentric where it might be a little bit easier to unpack the, you know, IPV4 and the wave, you know, impact just given the concentration of those products in NetCentric. Thanks.

Yes, so on the net-centric side, it is easier because we do break out the IPv4 revenue, of which 85% of it is net-centric. We break out the WAVE revenue, which is virtually all net-centric. And then the incremental difference is the growth in the core transit product. In the corporate business, there was a mix of DIA and VPN services at Cogent, and then a mix at Sprint. At Sprint, the mix was much heavier VPN than it was DIA. At Cogen, it was much more DIA. We have converted some of the Sprint customers from MPLS to VPLS VPNs, improving the profitability, but we are continuing to support the MPLS product long term. We are trying to move as much on net as possible. But the underlying growth in the corporate business at Cogent has come mostly from DIA.

Our next question comes from the line of David Barden with New Street Research. Please go ahead.

Hey, guys. Thanks so much for taking the questions. Hey, Dave, how are you doing? Okay. So thank you for squeezing me in. I've got a few questions. And the first one, Dave, and I apologize for asking this, is about your new contract that you've signed in January with the board and how we as investors from the outside look at maybe how your incentives have changed. You know, you always took stock in compensation. Now you're getting cash compensation. Does that change how you think about the business, how you think about dividends? It would be really helpful to get some insight there. I think the second question, maybe for Tad, is when you talk about secured financing, what specifically are you planning on securing? How much are you planning to secure, and what rates are you expecting? Thank you, guys.

All right, great. So, first of all, with regard to my contract, you know, I am still in negotiations with the comp committee for some additional equity going forward. The vast majority of my compensation, roughly 80% of it, remains in equity, and that equity does not begin to vest until 2029. So there's both a long-term cliff and a significant portion that needs to vest. Now, so I do not have to pledge shares going forward, which created a cascade of bad events. You know, I now have cash compensation that will allow me to pay both taxes and, you know, to be able to live, but it is a fraction of my total compensation. In terms of being able to go forward and how I think about dividends, you know, I'm as committed to shareholder returns as I've ever been. You know, we have shifted our priorities to get our leverage down, and I think we will be in a position where we will see our leverage rapidly fall and be able to return to either buybacks, dividends at a higher rate or a combination thereof. I'll let Ted touch on the refine and I may jump in as well.

Well, I mean, we're in negotiation with multiple parties, we essentially only come to terms on the amount, but not with percent and the rest of these.

I think we have a very clear structure that will allow us to do this as secured debt. I don't think this call is the correct forum to, you know, roll that out, but we will ensure And we also will anticipate that the current secured debt is a pretty good indication of about where our new debt will price.

Got it. And is there anything about the 2032s that is relevant to kind of rolling the 27s?

Not really. I mean, you know, the same tests will be in place, will be governed by the most restrictive covenants, which will probably be the existing 32s, and that will be, you know, four times secured leverage and a two times debt service test.

Got it. And if I could just squeeze in one more, I really appreciate it, guys. Thank you so much. is, Dave, you've kind of mentioned that the two kind of things that were going to be advantages for you in the wave market were price and time provision. I think you said you're down to 30 days. I think you targeted two weeks. Could you elaborate a little bit on the kind of process to get to even better provision timing, and where are you, do you believe, on a price perspective relative to quote-unquote market?

Yeah, I'll take the price one first. I think we're probably at a 20% to 30% discount. I also believe our advantages are more than you outlined. I think the breadth of the footprint, as well as the diversity of the routes and reliability are all really important criteria. And I think the acceleration you're seeing in our waves business is as a result of that. And then in terms of getting the provisioning window even shorter, I think it will be three things. It will be one, our just continued process refinement as we do more, but 30 days is still So, generally, three to four times quicker than industry averages. A third party actually just last month released a report benchmarking us, and in terms of wavelength services, out of all of the providers, and there were several dozen providers, both regional and national evaluated, we were actually number two in terms of provisioning already, and I think we'll end up being number one, just like we are in IP. I think the other thing that is a constraint today is actually pluggable optics lead times have become more challenging just because of, you know, the pressures that some of the massive data center builds have put on the entire ecosystem for telecom and networking equipment. Thank you, Dave. Our next question comes

from the line of Mike Funk with Bank of America. Please go ahead.

All right. Good morning, Dave. How are you? Hey, great, Mike. Yeah, I just had one question, Dave. Going back to the sequential revenue growth, But, you know, I'm looking at the street forecast, and consensus is for about 3.5 million sequential revenue growth in 2026. And this is not why it's the 26-ish. I think historically, the street forecast revenue grows faster than actual, probably a combination of constructive commentary from the company, the longer-term revenue growth guidance provided, and relative opaqueness of your business. I don't think it's helpful to have revenue growth so much higher than the actual. So, you know, maybe help us think about the correct rate of sequential revenue growth in 2026 to reduce some of the volatility that we see in your stock on earnings.

Yeah. And, you know, it's a delicate balancing act because while I want to give clarity and guidance, I am not comfortable in giving quarterly or even annual guidance. You know, I do think that over a multi-year period, that 6% to 8% growth rate is what is absolutely appropriate to model. You know, I'm going to have to leave it to every analyst to do their own diligence and channel checks. And we're just not going to give a number that says 3.5 is too high or too low on a sequential increase in revenue. What we said is, from this point forward, we're comfortable that our quarterly reported revenues are going to grow. We think that's going to continue to improve. We think that that growth is going to be driven by high margin products, and, you know, just as you said, maybe street numbers were too high on top line, they've consistently underestimated our ability to expand margins.

Maybe one more if I could, Dave, sneak it in here. Rep productivity, wanted to touch on that, they've been coming down. What are you doing internally, changing processes, people, to improve rep productivity?

So the productivity is measured on a units basis. If you've actually noticed, our ARPUs have actually gone up somewhat to, you know, we are focused more on on-net services. So there is a higher payout for on-net versus off-net to help get to that 80-20 mix that I referenced. And then third, you know, we continue to train, to promote internally, and try to incent our sales force to grow. But, you know, we do still have 5.4 percent per month of turnover. That is below the long-term average of 5.7, the peak of 8.7. But our productivity at 4.1 for the fourth quarter was actually about 18 percent better than our rep productivity in the fourth quarter of 2024. There is some seasonality to rep productivity. And while, you know, the 4.8 that we average is good, we actually think we can do better than that. And I think you'll see that number trend up as, you know, this focus on that and as we kind of roll through the seasonality that I mentioned.

Great. Thank you, Dave. And, Dave, thanks for taking all the questions today. I really appreciate it. Hey, thanks, Michael.

Our next question comes from the line of Anna Bioschko with Bank of America. Please go ahead.

Hi. Thanks very much, Dave. So just on the plan to refi the 27 sort of dollar for dollar with new securities, So in the prior question on the planned use of proceeds of any data center sale, you clearly didn't commit to using it to repay debt. So I think you said you have options. But when you reduced your dividend in the last earnings announced date, The rationale that was provided for reducing the dividend was that you wanted to focus on deleveraging. And I think implicit in that was the idea that cash on the balance sheet, potential cash from asset sale proceeds, and potential cash from free cash flow would be used to repaid debt. So I just wanted to revisit that concept. And, you know, what the plan is to get leveraged down and I believe you cited a target of four times.

Yes, that is absolutely correct, Anna. And we are absolutely committed to not materially changing our return of capital either through buybacks or dividends until we reach four times net leverage. We each quarter have less monies due to us from T-Mobile, which we're counting in our leverage. So that is a bit of a hill that we have to climb. We also are, again, delivering both on a gross and net basis and I think we will continue to do that and you know holding cash on the balance sheet has the exact same impact on net debt we have not been specific around a gross debt target and we may opportunity, opportunistically even buy back some of our debt if it sometimes trades at a discount as our current secured debt has. That could also be an effective mechanism to use excess cash to reduce leverage. But we are absolutely committed, I want to leave no ambiguity, that we intend to to get, for the entire complex, not just the borrower group, down to four times net leverage before we materially change our return of capital strategy.

Okay. And then thanks for that. And then secondly, I know you don't provide specific guidance, but in terms of your ability to generate free cash flow particularly this year what is your level of confidence and you know maybe some order of magnitude if you expect it to be

positive so we absolutely will produce a growth in EBITDA you know you can extrapolate what we have done and then layer on the contribution margins with the mix shift that I described, and then layer in some of the aggregate savings. Two, we absolutely expect our capital expenditures to go down. Those two things will allow us to generate unlevered free cash flow growth, and it is Most likely that when we refinance the unsecureds, our coupon will be slightly higher probably than it is today for the current unsecureds, even though we will be converting them to secured. That is highly dependent on how the current bonds trade. But, you know, we do think that even on a levered basis, we will be generating free cash. It's as close to guidance as you're going to get me.

Okay. Okay. Well, thank you, Dave.

Thanks. And that concludes our question and answer session. I will now turn the call back over to Mr. Dave Schaefer for closing remarks.

Well, first of all, I want to thank everyone. I know it was an hour and a half. We have actually gone longer. I thought this was somewhat unique in that we added a lot more granularity to our disclosures around the trajectory of the Sprint acquired business and also the relative mix of products. You know, I think in summary, there are three really important objectives for Cogent to build value. One is to grow top line, two, to continue to expand margins, and then three, eliminate any overhang of a debt maturity that is, you know, 17 months away. And I think on all three of those factors, we are and will continue to demonstrate meaningful progress. Thanks, everyone. And we'll talk soon. Take care. This took us today's conference call. You may now disconnect.