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Item 1. Business

2025-02-28 compared with 2024-02-29 · 124 added, 119 removed, 286 unchanged (46% of the section changed)

We are a facilities-based provider of low-cost, high-speed Internet access, private network services, and data center colocation space and power.

Description of business

We are a facilities-based provider of low-cost, high-speed Internet access, private network services, optical wavelength and optical transport services and data center colocation space and power.

Our network is specifically designed and optimized to transmit packet-routed data.

We deliver our services on our network to businesses, large and small, communications service providers and other bandwidth-intensive organizations in 54 countries across North America, Europe, Asia, South America, Oceania and Africa.

We are a Delaware corporation, and we are headquartered in Washington, DC.

We deliver our services primarily to businesses, large and small, communications service providers and other bandwidth-intensive organizations in 56 countries across North America, Europe, South America, Oceania and Africa.

We are a Delaware corporation and headquartered in Washington, DC.

We offer on-net Internet access services exclusively through our own facilities, which run from our network to our customers’ premises.

We offer our on-net services to customers located in buildings that are physically connected to our network.

As a result, we are not dependent on local telephone companies or cable TV companies to serve our customers for our on-net Internet access and private network service.

Our on-net service consists of high-speed Internet access and private network services offered at speeds ranging from 100 megabits per second (“Mbps”) to 400 gigabits per second (“Gbps”).

We provide our on-net Internet access, private network services and MPLS services to our corporate, net-centric and enterprise customers.

Our corporate customers are located in multi-tenant office buildings (“MTOBs”), which typically include law firms, financial services firms, advertising and marketing firms, as well as health care providers, educational institutions and other professional services businesses.

As a result, we are not dependent on local telephone companies or cable TV companies to serve our customers for our on-net Internet access and private network services.

Our on-net service consists of high-speed Internet access and private network services offered at speeds ranging from 100 megabits per second to 400 gigabits per second.

We provide our on-net Internet access and private network services to our corporate, net-centric and enterprise customers.

Our corporate customers are located in multi-tenant office buildings that typically include law firms, financial services firms, advertising and marketing firms, as well as health care providers, educational institutions and other professional services businesses.

Our net-centric customers include bandwidth-intensive users that leverage our network either to deliver content to end users or to provide access to residential or commercial Internet users.

Content delivery customers include over the top (“OTT”) media service providers, content delivery networks, web hosting companies, and commercial content and application software providers.

Our net-centric customers include 7,988 access networks comprised of other Internet service providers (“ISPs”), telephone companies, mobile phone operators and cable television companies that collectively provide internet access to a substantial number of broadband subscribers and mobile phone subscribers across the world.

These net-centric customers generally receive our services in carrier neutral colocation facilities and in our data centers.

We expanded selling our services to enterprise customers in connection with our acquisition of the Sprint Business (as defined below).

We define “enterprise” customers as large corporations (typically, Fortune 500 companies or companies with greater than $5 billion in annual revenue) running Wide Area Networks (“WANs”) with several dozen to several hundred sites.

Our enterprise customers generally purchase our services on a price per location basis.

Content delivery customers include over the top media service providers, content delivery networks, web hosting companies, and commercial content and application software providers.

Our net-centric customers include access networks comprised of other internet service providers (“ISP’s”), telephone companies, mobile phone operators and cable television companies that collectively provide internet access to a substantial number of broadband subscribers and mobile phone subscribers across the world.

These net-centric customers generally receive our services in carrier neutral colocation facilities and in our own data centers.

We operate data centers throughout North America and Europe that allow our customers to collocate their equipment and access our network.

In addition to providing our on-net services, we provide Internet access and private network services to customers that are not located in buildings directly connected to our network.

Additionally, the Sprint Business (as defined below) customers include a number of companies larger than our historical customer base.

In connection with the acquisition of Sprint Communications, we expanded selling services to these larger “Enterprise” customers.

In addition to providing on-net services, we provide Internet access and private network services to customers that are not located in buildings directly connected to our network.

We provide these off-net services primarily to corporate customers using other carriers’ circuits to provide the “last mile” portion of the link from the customers’ premises to our network.

Wavelength and Optical Transport Services

In connection with our acquisition of the Sprint Business (as defined below), we expanded our offerings to include optical wavelength services and optical transport services over our fiber network.

We are selling these wavelength services to our existing customers, customers of the Sprint Business and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.

We are increasing the number of locations where we can sell wavelength services to meet customer demand.

We also provide certain non-core services because of certain acquisitions, including our acquisition of the Sprint Business.

We also provide certain non-core services that resulted from acquisitions, including the acquisition of Sprint Communications (as discussed below).

We continue to support but do not actively sell these non-core services.

We expect that our revenues from non-core services will decline.

In connection with our acquisition of Sprint Communications, we began to provide optical wavelength services and optical transport services over a network that is generally independent of our legacy IP network.

We are selling these wavelength services to our existing customers, customers of Sprint Communications and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.

Acquisition of the Sprint Business

On May 1, 2023 (the “Closing Date”), Cogent Infrastructure, Inc., a Delaware corporation and our direct wholly owned subsidiary (“Cogent Infrastructure”), closed on its acquisition of the U.S.

On May 1, 2023 (the “Closing Date”), Cogent Infrastructure, Inc., (now Cogent Infrastructure, LLC), a Delaware corporation and our direct wholly owned subsidiary (the “Buyer” or “Cogent Infrastructure”), closed on its acquisition of the U.S.

long-haul fiber network (including the non-U.S.

extensions thereof) of Sprint Communications and its Subsidiaries (the “Sprint Business”) in accordance with the terms and conditions of the Membership Interest Purchase Agreement (the “Purchase Agreement”), dated September 6, 2022, by and among us, Sprint Communications LLC, a Kansas limited liability company (“Sprint Communications”) and an indirect wholly owned subsidiary of T-Mobile US, Inc., a Delaware corporation (“T-Mobile”), and Sprint LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of T-Mobile (the “Seller”).

restructuring and divisive merger, holds Sprint Communications’ assets and liabilities relating to the Sprint Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).

On the Closing Date, we purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) of Wireline Network Holdings LLC, a Delaware limited liability company that, following an internal restructuring and divisive merger, holds Sprint Communications’ assets and liabilities relating to the Sprint Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).

Corporate Structure after the Closing Date

The Company operates through its two direct, wholly owned subsidiaries, Cogent Infrastructure and Cogent Communications Group, Inc.

(“Cogent Group”).

The Company operates through its two direct, wholly owned subsidiaries, Cogent Infrastructure and Cogent Communications Group, LLC (“Cogent Group”).

Cogent Infrastructure holds the Sprint Business operations.

Sprint operating subsidiaries in over 30 countries worldwide, approximately 1,300 Sprint customers, both enterprise and wholesale, vendor and supply agreements and over 9.7 million IPv4 addresses.

Cogent Group is the parent of Cogent Communications, Inc., which was our sole operating company prior to the Closing Date, and Cogent Group is the issuer of our $500.0 million of 3.50% senior secured notes due in May 2026 (“2026 Notes”) and our $450.0 million of 7.00% senior unsecured notes due in June 2027 (“2027 Notes”).

Cogent Group owns, among other things, our IRU network, Cogent data centers, Cogent operating subsidiaries in 54 countries worldwide, our corporate and net-centric customer base and over 28 million IPv4 addresses.

Following the Closing Date, Cogent Infrastructure, through its subsidiaries, owned, among other things, the Sprint Network (as defined below), consisting of approximately 20,800 route miles of owned fiber optic cable in the continental United States, a portfolio of owned and leased properties totaling approximately 1.9 million square feet, Sprint operating subsidiaries in over 30 countries worldwide, approximately 1,300 Sprint customers, both enterprise and net-centric, vendor and supply agreements and 9.9 million IPv4 addresses.

On May 2, 2024, Cogent IPv4 LLC (the “IPv4 Issuer”), a special-purpose, bankruptcy remote, indirect wholly owned subsidiary of the Company, issued $206.0 million aggregate principal amount of 7.924% IPv4 Notes (the “IPv4 Notes”), with an anticipated term ending in May 2029 (such anticipated repayment date, the “ARD”), in an offering exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”).

Cogent Group is the parent of Cogent Communications, LLC (formerly Cogent Communications, Inc.), which was our sole operating company prior to the Closing Date, and Cogent Group is the issuer of our $500.0 million of 3.50% senior secured notes due in May 2026 (“2026 Notes”) and our $750.0 million of 7.00% senior unsecured notes due in June 2027 of which $450.0 million were issued in June 2022 (“2027 Notes”) and $300.0 million were issued in June 2024 (“2027 Mirror Notes”).

Cogent Group owns, among other things, our indefeasible-right-of-use (“IRU”) network, Cogent data centers, Cogent operating subsidiaries in 56 countries worldwide, our corporate and net-centric customer base and over 25 million IPv4 addresses.

Cogent Group also receives payments due from T-Mobile for IP transit services in connection with the Transaction.

We have moved and may continue to move, to the extent permitted by and in compliance with the indentures governing our 2026 Notes and 2027 Notes, certain assets and obligations between the companies owned by Cogent Infrastructure and Cogent Group to better align these assets and obligations with our business and operations and for general corporate purposes.

We have moved and may continue to move, to the extent permitted by and in compliance with the indentures governing our 2026 Notes, 2027 Notes, 2027 Mirror Notes and IPv4 Notes, certain assets and obligations between the companies owned by Cogent Infrastructure and Cogent Group to better align these assets and obligations with our business and operations and for general corporate purposes.

Competitive Advantages

We believe we address many of the data communications needs of businesses large and small, communications service providers and other bandwidth-intensive organizations by offering them high-quality, high-speed Internet access and private network services at attractive prices.

With our acquisition of the Sprint Business, we began offering services to larger enterprise customers.

After our acquisition of the Sprint Business, we began offering services to larger enterprise customers.

We believe that our organization has the following competitive advantages:

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Our single network protocol allows us to avoid many of the costs that our competitors who operate circuit-switched, time-division multiplexing (“TDM”) and hybrid fiber coaxial networks incur related to provisioning, monitoring and maintaining multiple transport protocols.

Selecting one operating protocol has also had positive effects in terms of our operating overhead and the simplicity of our organization.

We believe the vast majority of our competition currently operates their networks with multiple protocols, and we believe that attempts to upgrade their networks to one protocol would be operationally challenging and costly.

We have acquired a large portfolio of dark fiber leases from over 325 dark fiber vendors from around the world sourced from the excess inventory of existing networks.

Selecting one operating protocol has positively impacted our operating overhead and the simplicity of our organization.

We believe the vast majority of our competitors currently operate their networks with multiple protocols and we believe that attempts to upgrade their networks to one protocol would be operationally challenging and costly.

● Our IP Network .

We have acquired a large portfolio of dark fiber leases from 369 dark fiber vendors from around the world sourced from the excess inventory of existing networks.

The nature of this portfolio and the individual leases provide us long-term access to dark fiber at attractive rates and, in many cases, the opportunity to extend these leases for multiple terms.

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Acquiring the Sprint Network allows us to capitalize on the benefits of owning network without significant upfront capital investment.

The Sprint Network is mostly complementary to our

existing leased dark fiber network, offers unique geographic routes and will allow us to reduce our reliance on leased dark fiber.

The Sprint Network is mostly complementary to our existing leased dark fiber network, offers unique geographic routes and will allow us to reduce our reliance on leased dark fiber.

This strategic combination of owned and leased dark fiber will help to ensure a robust and reliable network and enables us to connect via dark fiber to virtually any geographic route or facility we require on a long-term, cost-effective basis.

● Optical Wave Network - Acquiring the Sprint Network has also allowed us to construct a wavelength network using the predominantly owned fiber.

This enables us to expand our product offerings to include optical wavelength and optical transport services.

We are selling these services to our existing customers, customers acquired with the Sprint Business and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.

As of December 31, 2024, we offered this service in 808 data centers in the United States, Mexico and Canada.

We believe our wavelength service has the advantages of unique routes, ubiquitous service locations, faster provisioning times and lower prices.

● Narrow and Focused Product Set .

Since our founding, we have strategically focused on delivering a very narrow product set to our customers.

The vast majority of our revenue is driven by or related to our high-capacity, bi-directional, symmetric internet access services which can be accessed on-net in MTOBs and carrier neutral data centers (“CNDCs”) or off-net through other carriers’ “last mile” connections to customer facilities.

The addition of optical wave and optical transport services and our decision to continue to support MPLS VPN services for our acquired customers are consistent with this strategy.

There are significant cost advantages as a result of this narrow product set.

The vast majority of our revenue is driven by or related to our high-capacity, bi-directional, symmetric Internet access services which can be accessed on-net in multi-tenant office buildings (“MTOBs”) and carrier neutral data centers (“CNDCs”) or off-net through other carriers’ “last mile” connections to customer facilities.

The addition of optical wave and optical transport services, our direct, VPN connection to cloud providers services and our decision to continue to support MPLS virtual private network (“VPN”) services for our acquired customers are consistent with this strategy.

Consistent with this strategy, we have pared, and continue to pare, non-core services acquired with the Sprint Business.

There are significant cost advantages because of this narrow product set.

We believe that the relative size of our salesforce training, support and overhead is lower than comparable telecom providers that tend to offer a broader, one-stop shop product set to their client base.

● Scalable Network Equipment and Hub Configurations .

Due to our single network protocol and narrow product set, our transmission and network operations rely mainly on two sets of equipment for operation.

The addition of optical waves and optical transport services to our product set has not altered this configuration.

We have begun the process of building two distinct networks:

a network optimized for our historical IP-based Internet services and a network optimized for optical wave (optical transport services).

The operation of two separate networks, however, has not altered our primary reliance on two sets of equipment for operation, nor has the addition of optical waves (optical transport services) to our product set altered this equipment configuration.

In order to further scale our operating leverage, we have systematically reused older equipment in less dense portions of our network.

Due to interoperability between the generations of products, we are able to transfer older equipment from our core, high-traffic areas to less congested portions of our network.

The result of this dynamic grooming process is that we are able to utilize our equipment for materially longer periods than the expected life of this equipment, thereby reducing our capital investment in our network.

We design and build all of our network hubs, points of presence (“PoP”s), and data centers to the same standards and configurations.

This replication strategy provides us scale benefits in equipment purchases, training, and maintenance.

The result of this dynamic grooming process is that we are able to utilize our equipment for materially longer periods than our competitors, thereby reducing our capital investment in our network.

We design and build all of our network hubs, points of presence, and data centers to the same standards and configurations.

his replication strategy provides us scale benefits in equipment purchases, training, and maintenance.

Greater Control and Superior Delivery .

Our on-net service does not rely on circuits that must be provisioned by a third-party carrier.

In our on-net MTOBs, we provide our customers the entire network, including the “last mile” and the in-building wiring connecting to our customer’s suite.

In the CNDCs, we are collocated with our customers.

In our on-net MTOBs, we provide our customers the entire network, including the “last mile” and the in-building fiber optic connections to our customer’s suite.

In our CNDCs, we are collocated with our customers.

As a result, only a cross-connection within the data center is required to provide our services to our customers, including our newer optical wave and optical transport offerings.

The structure of our on-net service provides us with more control over our service, its quality and pricing.

The structure of our on-net service provides us with more control over our service, quality and pricing.

It also allows us to provision services more quickly and efficiently than provisioning services on a third-party carrier network.

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We have systematically evaluated and chosen our network extensions to buildings, data centers and markets based upon a rigorous set of criteria to evaluate the economic opportunity of network locations.

Additional factors relevant to our pursuit of new buildings include the willingness of building owners to grant us access rights, the availability of optical fiber networks to serve those buildings, and the costs to connect buildings to our network and equipment availability.

Additional factors relevant to our pursuit of new buildings include the willingness of building owners to grant us access rights, the availability of optical fiber networks to serve those buildings, the costs to connect buildings to our network and equipment availability.

We have also begun to evaluate the sustainability of new locations by evaluating the LEED Green Rating of Buildings, the potential to source renewable energy at locations and the potential impact of climate change on a location including proximity to water and the risk of flooding.

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These buildings include 1,871 large MTOBs (totaling over 1.0 billion square feet of office space) in major North American cities where we offer our services to a diverse set of high-quality corporate customers within close physical proximity of each other.

These buildings also include 1,558 CNDCs located in 1,347 buildings in North America, Europe, Asia, South America, Oceania and Africa where our net-centric customers directly interconnect with our network.

As of December 31, 2023, we also operate 68 of our own data centers (13 of which converted from facilities acquired with the Sprint Business) across the United States and in Europe, which comprise over 1.3 million square feet of floor space, offer 125 MW of power, and are directly connected to our network.

These buildings also include 1,646 CNDCs located in 1,478 buildings in North America, Europe, South America, Oceania and Africa where our net-centric customers directly interconnect with our network and 55 Cogent edge data centers.

We also operate 104 of our own data centers 48 of which were converted from facilities acquired with the Sprint Business) across the United States and in Europe, which comprise over 1.9 million square feet of floor space, offer 177 MW of power and are directly connected to our network.

We believe that these network points of presence strategically position our network to attract high levels of Internet traffic and maximize our revenue opportunities and profitability.

Balanced, High-Traffic Network .

Balanced, High-Traffic IP Network.

Since its inception, our network has grown significantly in terms of its geographic reach, customer connections, and traffic.

We currently serve 7,988 access networks as well as numerous large and small content providers, 54,493 corporate customer connections and 20,740 enterprise customer connections.

Because of these growing bases of customers who distribute (content providers) and receive (access networks) content on our network, we believe that the majority of all the traffic remains “on-net” by both originating and terminating on our network.

This control of traffic is an important differentiator as it

increases our service reliability and speed of traffic delivery.

The increasing share of traffic delivered from content providers to access networks also enhances our margins as we are compensated by both the originating customer and terminating customer.

We currently serve 8,250 access networks as well as numerous large and small content providers and 47,371 corporate customer connections and 14,776 enterprise customer connections.

Because of these bases of customers who distribute (content providers) and receive (access networks) content on our network, we believe that the majority of all the traffic remains “on-net” by both originating and terminating on our network.

This control of traffic is an important differentiator as it increases our service reliability and speed of traffic delivery.

The increasing share of traffic delivered from content providers to access networks also enhances our margins as we are compensated by both the originating customer and the terminating customer.

The breadth of our network, extensive size of our customer base, and the volume of our traffic enables us to be one of a handful of Tier 1 networks that are interconnected on a settlement-free basis.

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Several members of the senior management team have been working together at the Company since 2000.

Our senior management team has designed and built our network and, during our formative years, led the integration of network assets we acquired through the 13 significant acquisitions prior to our acquisition of the Sprint Business and managed the expansion and growth of our business.

Our senior management team has designed and built our network and, during our formative years, led the integration of network assets we acquired through 13 significant acquisitions prior to our acquisition of the Sprint Business and managed the expansion and growth of our business.

A number of the members of senior management who joined us as part of our acquisition of the Sprint Business have similar experience and tenure in both the telecommunications industry and at the Sprint Business.

We anticipate that our management team will successfully manage the integration of the Sprint Business into our current operations.

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With our acquisition of the Sprint Business, we acquired a number of larger enterprise customers.

While we are in the process of terminating certain non-core services to these customers at the end of their current term, we have continued to provide our core services to enterprise customers and elected to provide MPLS services, a new service for the Company, as well.

We have not previously focused our sales efforts on larger enterprise customers.

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We are currently one of the leading providers of high-speed internet access to a variety of content providers and access networks across the world.

We intend to further load our high-capacity network as a result of the growing demand for high-speed internet access generated by these types of bandwidth-intensive applications such as OTT media services, online gaming, video, Internet of Things, voice over IP, remote data storage, and other services.

We intend to further load our high-capacity network as a result of the growing demand for high-speed Internet access generated by these types of bandwidth-intensive applications such as over-the-top media services, online gaming, video, Internet of Things, voice over IP, remote data storage, and other services.

We expect that we will continue to grow our shares of these segments by offering our customers a series of attractive features including:

● Geographic breadth – We have the broadest CNDC footprint in the industry and currently offer network services in 54 countries – as net-centric customers seek a more international audience, this footprint is a significant advantage;

● Geographic breadth – We have one of the broadest CNDC footprints in the industry and currently offer network services in 56 countries – as net-centric customers seek a more international audience this footprint is a significant advantage;

● High capacity and reliability – We offer 100 Mbps to 100 Gbps ports in all of the CNDCs and 400 Gbps in selected locations on our network, which differentiates the capacity choices we provide our net-centric clients;

● Balanced customer base – Our leading share of content providers and access networks increases the amount of traffic that originates and terminates on our network, thereby reducing latency and enhancing reliability;

● Balanced customer base for IP services – Our leading share of content providers and access networks increases the amount of traffic that originates and terminates on our network thereby reducing latency and enhancing reliability;

● Large and dedicated salesforce – Our team of net-centric sales professionals is one of the largest salesforces in this industry segment and enables us to better serve this customer segment while also identifying new sales opportunities and gaining new business and customers;

● Wave and optical transport services – We began offering wave and optical transport services to our net-centric customers who require these high bandwidth services

● Wave (optical transport services) – We began offering wave (optical transport services) to our net-centric customers who require these high bandwidth dedicated point-to-point services.

Pursue On-net Customer Growth.

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A critical factor in our success has been our investment and focus on our sales and marketing efforts.

We seek to maintain a consistent level of sales productivity as measured by the number of connections sold per salesperson per month, taking into account adjustments to the changing mix of products sold and installed.

We seek to maintain a consistent level of sales productivity as measured by the number of connections sold per salesperson per month, considering adjustments to the changing mix of products sold and installed.

In order to gain market share in our targeted businesses, we expect to continue our sales efforts including introducing strategies and tools to optimize and improve our sales productivity.

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We continue to negotiate reduced pricing under our numerous carrier agreements that enable us to reduce our cost of off-net services, which enhances our competitive position in the marketplace.

Expand our Product Offerings to Include Wavelength and Optical Transport Services .

In connection with our acquisition of the Sprint Business, we expanded our offerings of optical wavelength and optical transport services over our fiber network.

Expand our Product Offerings to Include Wavelength - Optical Transport Services .

In connection with our acquisition of the Sprint Business, we expanded our offerings of optical wavelength - optical transport services over our fiber network.

We currently offer wavelength services in 401 CNDCs and intend to offer this service in approximately 800 CNDCs in the United States and Mexico by the end of 2024.

We currently offer wavelength services in 808 data centers in the United States, Mexico and Canada.

We believe our wavelength service has the advantages of unique routes, ubiquitous service locations, faster provisioning times and lower prices.

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Repurposing these facilities included removing unused, obsolete equipment and racks, and upgrading or installing new HVAC systems, uninterruptable power supplies (“UPS”), backup generators and fire suppression systems as well as other structural changes.

By the end of 2023, we had converted 13 former Sprint facilities and are in the process of converting approximately 30 additional facilities.

If and when these facilities are all suitable for data center customers, we will have added 1.31 million square foot of floor space and approximately 113 MW of available power to our data center portfolio.

By December 31, 2024, we had converted the former Sprint facilities into 48 Cogent data centers and 55 Cogent edge data centers.

In connection with this conversion process, we expect to decommission certain legacy Cogent data centers.

Increase our Leasing of IPv4 Address Space .

We lease IPv4 address space to our customers, both on a standalone basis and as a complement to a customer’s Internet access services with us.

We provide a small number of free IPv4 addresses to our dedicated internet access customer as well.

We provide a small number of free IPv4 addresses to our dedicated Internet access customers as well.

We currently own approximately 38 million IPv4 addresses, of which 9.9 million were recently acquired at the closing of the Sprint Business acquisition.

We currently lease nearly 11.1 million of our IPv4 addresses to our customers on contracts with service terms ranging from 1 month to 5 years.

We currently lease 13.0 million of our IPv4 addresses to our customers on contracts with service terms ranging from one month to five years.

We intend to continue to lease IPv4 addresses to our customers as well as explore alternatives for monetizing our IPv4 address inventory.

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We believe that our network is more reliable and carries packet routed traffic at lower cost than networks built as overlays to traditional circuit-switched telephone networks.

Our network is comprised of 3,277 buildings which are on-net, and we serve 228 metropolitan markets in North America, Europe, Asia, South America, Oceania and Africa.

Our network is comprised of 3,453 on-net buildings and we serve 264 metropolitan markets in North America, Europe South America, Oceania and Africa.

Important strategic components of our network include:

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● 104 Cogent Data Centers;

● 1,251 intra-city networks, or rings, consisting of 77,365 fiber miles and 24,779 fiber route miles;

● 808 wave enabled CNDC’s;

● 55 Cogent edge data centers;

● 1,132 intra-city IP networks, or rings, and 203 metro wave rings, consisting of 87,678 fiber miles and 29,802 fiber route miles;

● an inter-city network of 79,621 terrestrial fiber route miles;

● 244 high-capacity transoceanic circuits that connect the North American, European, Asian, South American, Oceanic and African portions of our network.

● 320 high-capacity transoceanic circuits that connect the North American, European, South American, Oceanic and African portions of our network.

Our network consists of owned optical fiber in the Sprint Network and leased optical fiber on a long-term basis from carriers with large amounts of unused fiber to which we directly connect our own optical equipment and Internet routers to form our optical fiber national backbone.

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Inter-city Network.

Our inter-city network consists of optical fiber, including transoceanic capacity circuits for undersea portions, connecting major cities in North America, Europe, Asia, South America, Oceania and Africa.

Our inter-city network is comprised of the approximately 19,000-mile inter-city portion of the Sprint Network and long-term, leased strands of optical fiber, typically two, out of the multiple fibers owned from various dark fiber vendors.

Our inter-city network consists of optical fiber, including transoceanic capacity circuits for undersea portions, connecting major cities in North America, Europe, South America, Oceania and Africa.

Our inter-city network is comprised of the approximately 19,000-mile inter-city portion of the Sprint Network and long-term, leased strands of optical fiber, typically two to four, out of the multiple fibers owned from various dark fiber vendors.

We install the optical and electronic equipment necessary to amplify, regenerate, and route the optical signals along this network.

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In each metropolitan area in which we provide our high-speed on-net Internet access services, our backbone network is connected to one or more routers that are connected to one or more of our metropolitan optical networks.

Our intra-city networks are a combination of the 1,300 miles of owned Sprint Network and our rights to use optical fiber that we obtained from carriers with optical fiber networks in those cities.

Our intra-city networks are a combination of the 1,300 miles of owned Sprint Network and our IRU rights to use optical fiber that we obtained from carriers with optical fiber networks in those cities.

These metropolitan networks consist of optical fiber that runs from the central router in a market into routers located in our on-net buildings.

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The router in the building provides the connection to each of our on-net customers.

Within the cities where we offer our off-net Internet access services, we lease circuits from telecommunications carriers, primarily local telephone companies and cable TV companies, to provide the “last mile” connection to our customer’s premises.

Within the cities where we offer our off-net Internet access services, we lease lit circuits from telecommunications carriers, primarily local telephone companies and cable TV companies, to provide the “last mile” connection to our customer’s premises.

Typically, these circuits are aggregated at various locations in those cities onto higher-capacity leased circuits that ultimately connect the local aggregation router to our network.

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In MTOBs where we provide service to multiple tenants, we connect our routers to a cable typically containing 12 to 288 optical fiber strands that run from our equipment that is generally located in the basement of the building through the building riser to the customer location.

Our service is initiated by connecting a fiber optic cable from our customer’s local area network in their suite to the infrastructure in the building riser giving our customer dedicated and secure access to our network using an Ethernet connection.

Our service is initiated by connecting a fiber optic cable from our customer’s local area network in its suite to the infrastructure in the building riser giving our customer dedicated and secure access to our network using an Ethernet connection.

We believe that Ethernet is the lowest cost network connection technology and is almost universally used for the local area networks that businesses operate.

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These facilities comprise over 1.9 million square feet of floor space with 177 MW of available power and are directly connected to our network.

We also operate 55 Cogent edge data centers.

Each location is equipped with secure access, UPS, and backup generators.

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Larger ISPs exchange traffic and interconnect their networks by means of direct private connections referred to as private peering.

We interconnect with the networks of our customers, which represents the majority of our interconnections and network traffic, through the sale of our transit services.

We interconnect with the networks of our customers, which represent the majority of our interconnections and network traffic, through the sale of our transit services.

We currently interconnect with 8,250 networks that pay us to exchange traffic as our customers.

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We have settlement-free private peering interconnections between our network and 23 other major ISPs who are not our customers.

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Tier 1 ISP Status.

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These relationships also reduce our cost of operating the network versus non-Tier 1 ISP peer networks who must compensate other networks in order to deliver a significant portion of their traffic.

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Peering agreements between ISPs enable them to exchange traffic.Without settlement-free peering agreements, each ISP backbone would have to buy Internet access from every other ISP backbone in order for its customer’s traffic to reach and be received from customers of other ISP backbones.

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Our field services organization includes over 350 employees globally.

The department facilitates the deployment, maintenance, and support of products or services in our data centers, network PoPs, CNDCs and MTOBs.

The department facilitates the deployment, maintenance, and support of products or services in our data centers, network points of presence (“PoPs”), CNDCs and MTOBs.

This department is responsible for on-site activities, ranging from initial installations and configurations to troubleshooting, repairs, and upgrades.

Field Services is also responsible for deployment, repair and reconfiguration of the approximately 20,000 miles of fiber optic cable comprising the Sprint Network.

Field Services is also responsible for deployment, repair and reconfiguration of the approximately 20,800 route miles of owned fiber optic cable comprising the Sprint Network.

Our Customers

We offer our high-speed Internet access and IP transit connectivity services to three sets of customers:

corporate customers, which primarily include small and medium-sized businesses located in North America, enterprise customers, and net-centric customers, which include, content providers, applications service providers and access networks, comprised of ISPs, cable operators, mobile operators and phone companies located in North America, Europe, Asia, South America, Oceania and Africa.

Our corporate customers primarily purchase dedicated internet access from us on-net in MTOBs and CNDCs or off-net through other carriers’ “last mile” connections to those customer facilities in metropolitan markets in North America.

This service enables these customers to access the Internet with a high-speed, bi-directional, symmetric circuit with a very high degree of reliability and 100% access to that contractual capacity at all times.

We offer our services to three sets of customers:

Our corporate customers primarily purchase our services from us on-net in MTOBs and CNDCs or off-net through other carriers’ “last mile” connections to those customer facilities in metropolitan markets in North America.

This service enables these customers to access the Internet with a high-speed, bi-directional, symmetric circuit with a high degree of reliability and 100% access to that contractual capacity at all times.

Depending upon the geographic breadth of our customers’ footprint and their communications requirements, we also sell these corporate customers private network services.

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We believe these agreements broaden our addressable market for corporate dedicated internet access, VPN services and/or MPLS and enable us to better leverage the skills and capacity of our direct salesforce.

As our sales of off-net services has increased, the pricing in our carrier agreements has commensurately decreased in light of our increased volume.

Our net-centric customers purchase IP connectivity and other services in our 1,558 CNDCs as well as our 68 data centers for a total of 1,626 data centers.

As our sales of off-net services have increased, the pricing in our carrier agreements has commensurately decreased in light of our increased volume.

Our net-centric customers purchase our services in our 1,646 CNDCs as well as our 104 data centers and 55 Cogent edge data centers for a total of 1,805 data centers.

We support these services in 264 metropolitan markets in 56 countries across the world.

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In addition to contractual capacity, certain net-centric customers also purchase metered service that enables customers to pay for actual volume of bits delivered on a per bit per second basis.

We also offer a burst product that allows net-centric customers to utilize capacity when they exceed their contractual capacity.

We also offer a burst product that allows net-centric customers to utilize

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capacity when they exceed their contractual capacity.

The per bit charge for this burst capacity typically exceeds the rate for contractual services.

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This service offers Internet access combined with rack space and power in our facilities, allowing the customer to locate a server or other equipment at that location and connect to our Internet access service.

We currently offer wavelength services in 401 CNDCs, and we intend to offer these services in approximately 800 CNDCs in the United States and Mexico by year-end 2024.

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We currently offer wavelength services in 808 CNDCs, in the United States and Mexico.

We began to serve enterprise customers in connection with our acquisition of the Sprint Business.

We define “enterprise” customers as large corporations (typically, Fortune 500 companies or companies with greater than $5 billion in annual revenue) running WANs with several dozen to several hundred sites.

Enterprise customers generally purchase dedicated internet access, MPLS and other services in on-net and off-net locations.

Enterprise customers generally purchase dedicated internet access, MPLS based VPN’s and other services in on-net and off-net locations.

Our enterprise customers generally purchase our services on a price-per-location basis.

We offer lower prices for longer term and volume commitments.

We emphasize the sale of our on-net services over our off-net services, as on-net services generate higher gross margins, and we believe we can offer faster installation and greater reliability with our on-net offerings.

Our People – Human Capital Management

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As of December 31, 2024, we had 1,916 employees located in 25 different countries in a variety of different roles.

Approximately 87% of our employees are located in the United States, Canada and Mexico, 11.2% are located in Europe and 1.6% are located in Asia and 0.2% in South America.

Approximately 88% of our employees are located in the United States, Canada and Mexico, 11% are located in Europe, 2% are located in Oceania and 0.2% in South America.

As of December 31, 2024, 34% of our employees were quota-bearing sales representatives, 10% were in sales management or sales support roles and 56% were in operational or administrative functions.

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Our sales and marketing organization comprises 45% of our employees and our sales representatives comprise 34% of our employees.

For the year ending December 31, 2023, we averaged a 5.0% monthly churn rate within our sales representatives.

For the year ended December 31, 2024, we averaged a 5.7% monthly churn rate within our sales representatives.

This churn was caused primarily by failures to meet sales performance goals as well as departures precipitated, we believe, by our decision to require all employees to adhere to a full-time, in office work environment as well as a tightening labor market creating increased competition when hiring.

During the year ended December 31, 2023, we hired 478 new sales representatives and ended the year with 657 sales representatives, a net increase of 109 sales representatives from our total sales representatives at December 31, 2022.

During the year ended December 31, 2024, we hired 443 new sales representatives and ended the year with 650 sales representatives, a net decrease of 7 sales representatives from our total sales representatives at December 31, 2023.

Our ability to recruit and retain all of our employees depends on a number of factors, including professional development, compensation and benefits, and employee engagement.

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A total of 942 employees transitioned to the Company on the Closing Date in connection with the acquisition of the Sprint Business.

From the Closing Date through December 31, 2023, we terminated 94 of these employees and 90 voluntarily resigned after a material reduction in their job duties.

From the Closing Date through December 31, 2024,624 of these employees remained - we terminated 151 of these employees and 167 voluntarily resigned after a material reduction in their job duties.

We paid approximately $28.6 million in severance costs, to qualifying employees, in accordance with the terms of the Purchase Agreement.

We have been fully reimbursed for these severance costs by the Seller.

We were fully reimbursed for these severance costs by the Seller.

Professional Development .

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To that end, we have invested heavily in professional development as a means for improving performance.

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As part of our commitment to professional development of our sales personnel, we established a sales training and enablement department that provides both online and in-person training.

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For the year ended December 31, 2024, our ratio of sales representatives with less than 12 months of tenure to regional learning managers was 20 to 1.

Our training group includes two additional trainers dedicated exclusively to training sales management, one trainer dedicated exclusively to our field services team, one technical trainer, one on-line curriculum trainer, one trainer dedicated to network operations and customer service, one trainer for customer care and three project managers.

Our trainers also conduct training in our offices to learn new skills and reinforce existing skills.

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While nearly all of our employees work solely in office environments, for our field personnel, we provide safety gear as appropriate given employee job duties.

We also provide training to our field personnel in a variety of workplace safety topics.

With respect to our decision to require all employees to work in an in-office environment, we continue to mandate that all employees in the United States and Canada, except those with legal exemptions, be vaccinated against the against the COVID-19 virus.

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Our quota-bearing sales force includes 650 employees with 347 employees focused primarily on the corporate market, 288 employees focused primarily on the net-centric market and 15 employees focused primarily on the enterprise market.

As of December 31, 2022, our sales force included 698 full-time employees, including 548 quota bearing sales force employees with 332 employees focused primarily on the corporate market and 216 employees focused primarily on the net-centric market.

As of December 31, 2023, our sales force included 847 full-time employees.

Our quota-bearing sales force includes 657 employees with 374 employees focused primarily on the corporate market, 271 employees focused primarily on the net-centric market and 12 employees focused primarily on the enterprise market.

Our sales personnel work through direct contact with potential customers in, or intending to locate in, our on-net buildings.

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We use a customer relationship management system to efficiently track sales activity levels and sales productivity.

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Indirect Sales.

We also have an indirect sales program.

Our indirect sales program includes several master agents with whom we have a direct relationship.

Through our agreements with our master agents, we are able to sell through thousands of sub agents.

All agents have access to selling to potential corporate customers and may sell all of our products.

We have an indirect channel team who manages these indirect relationships.

The indirect channel team is compensated with a base salary plus quota-based commissions and incentives.

We use our customer relationship management system to efficiently track indirect sales activity levels and the sales productivity of our agents under our indirect sales program.

In 2024, we discontinued our indirect sales program, as we determined that it was not financially effective.

Because of our historical focus on a direct sales force that utilizes direct contact, we have not spent funds on television, radio or print advertising.

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Our marketing efforts are designed to drive awareness of our products and services, to identify qualified leads through various direct marketing campaigns and to provide our sales force with product brochures, collateral materials, in building marketing events and relevant sales tools to improve the overall effectiveness of our sales organization.

In addition, we conduct building events and public relations efforts focused on cultivating

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industry analyst and media relationships with the goal of securing media coverage and public recognition of our Internet access, colocation and private network services.

In addition, we conduct building events and public relations efforts focused on cultivating industry analyst and media relationships with the goal of securing media coverage and public recognition of our Internet access, colocation and private network services.

We face competition from incumbent telephone and cable companies, and facilities-based network operators, many of whom are much larger than us, have significantly greater financial resources, sales and marketing capabilities, better-established brand names and large, existing installed customer bases in the markets in which we compete.

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Many of these companies offer products and services that are similar to our products and services.

For the portions of our network that are leased under indefeasible rights of use, or IRUs, from providers, some of which compete with us, we do not have title to the dark fiber.

For the portions of our network that are leased under IRUs from providers, some of which compete with us, we do not have title to the dark fiber.

We rely on the owner of this leased fiber to maintain the fiber.

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The extent of regulation can change.

For example, in 2017, the U.S.

Federal Communications Commission (“FCC”) rescinded regulations applicable to mass market Internet access providers.

In October 2023 the FCC voted to move ahead with a plan that would restore net neutrality rules and common-carrier regulation of Internet service providers.

The proposal would reclassify broadband as a telecommunications service, a designation that allows the FCC to regulate ISPs under the common-carrier provisions in Title II of the Communications Act.

In January 2025, the U.S.

Court of Appeals for the Sixth Circuit struck down the U.S.

Federal Communications Commission (“FCC”) 2024 Net Neutrality Order.

In the 2024 Net Neutrality Order, the FCC classified broadband as a telecommunications service.

In setting aside the 2024 Net Neutrality Order, the Sixth Circuit held that broadband providers offer only an information service and therefore the FCC lacked the statutory authority to impose net-neutrality policies through Title II of the Communications Act of 1934.

The decision by the Sixth Circuit does not apply to state laws protecting net neutrality.

For example, the California Internet Consumer Protection and Net Neutrality Act, previously upheld by the U.S.

Court of Appeals for the Ninth Circuit in 2022, is not impacted by the January 2025 ruling.

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In all jurisdictions regulations continue to evolve.

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We have established a compliance team to manage this effort.

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Available Information

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We make available through a link on our Internet website our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.

The reports are also made available through a link to the SEC’s Internet website at www.sec.gov .

The reports are also made available through a link to the Securities and Exchange Commission (SEC)’s Internet website at www.sec.gov .

You can find these reports and request a copy of our Code of Conduct on our website at www.cogentco.com under the “About Cogent” tab at the “Investor Relations” link under “Reports” and under “Governance” at “Corporate Governance Documents.”

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business