Cogent Communications Holdings Inc at Bank of America Media, Communications and Entertainment Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: David Barden - BofA Global Research (US) - Analyst : So I mean, there's a lot going on in the world. Some of it has to do with fiber-to-the-home, some of it has to do with fiber to AI, and everything has to do with fiber, and that seems to be your wheelhouse. So I wanted to -- let's start with -- Lumen was here earlier. We spent some time talking about the $5 billion contract that they signed, part with Microsoft and a handful of other players. And they're attributing the win and really the emergence of an entirely new business model to the conduits that Jim Crowe put in the ground 20 years ago, giving them a huge time-to-market advantage in what is a foot race between all the hyperscalers to build the AI engines of the future. And the question has risen, why not AT&T, why not Verizon, why not Zayo or why not Cogent? Is this a piece of business that you looked at? Or was it -- were you passed over because Lumen's conduit network was just so clearly advantaged in delivering what the hyperscalers need to get?

Question: David Barden - BofA Global Research (US) - Analyst : Low IRR for you, because you don't have a conduit and you don't have a deal with Corning to get all this fiber and perhaps reasonable IRRs for Lumen, who's in a different asset position?

Question: David Barden - BofA Global Research (US) - Analyst : Good analogy. I like one, Dave.

Question: David Barden - BofA Global Research (US) - Analyst : Well, you went a lot of years saying no to lots of deals before you got the Sprint deal. I want to talk a little bit more about that. But to your point, the -- we had Crown Castle here yesterday. They're looking at all options with respect to the fiber business that they have after Elliott got involved and catalyzed a strategic review of all that. Is there anything about that business that interests you? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:30PM, CCOI.OQ - Cogent Communications Holdings Inc at Bank of America Media, Communications and Entertainment Conference

Question: David Barden - BofA Global Research (US) - Analyst : So Uniti was here yesterday, and they're going to buy Windstream. And Kenny Gunderman said that they're looking at all options with respect to maximizing share price value for themselves, presumably that -- on its face, they're looking at something their managed services business, which probably doesn't sound like a Cogent type of business to be interested in. But they have a fiber-based services business in second and third tier markets. There's probably some assets at Windstream that could be merged into that. Is anything about that of interest to a Cogent?

Question: David Barden - BofA Global Research (US) - Analyst : Are you in that floor somewhere?

Question: David Barden - BofA Global Research (US) - Analyst : Okay. Let's talk about the deal that you did do, which is the Sprint deal. And I would say that I kind of look at it as having three parts, basically. I'm sure you look at it differently. But one part of the deal was, let's get the cost cutting done. Let's get this thing from loss-making to breakeven to maybe making, as you said, a modest amount of profitable EBITDA. And that's on track. It seems to be on track. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 2:30PM, CCOI.OQ - Cogent Communications Holdings Inc at Bank of America Media, Communications and Entertainment Conference

Question: David Barden - BofA Global Research (US) - Analyst : Aspect number two was the creation of new business opportunities, specifically wavelengths, but also maybe dark fiber.

Question: David Barden - BofA Global Research (US) - Analyst : That was going into part three. Part two is kind of the new core business things. And then part three was kind of the hidden value stuff, whether it's IPv4, data centers, maybe dark fiber is in there too. And so it seems like the surfacing of value in the hidden value has been a positive surprise with the ABS that you did for the IPv4. And I think just making people aware that IPv4 is a thing, which I don't think many people did before we started doing our calls on that, but that the wavelength business has been just way behind schedule. And it was weird to me because you know so much more about this business than anybody that your expectations for this wavelength business were so much higher than what you've been able to deliver. And the line of sight to when you will be able to deliver on the promises that you thought you were prepared to make a year ago is still fuzzy. And so let's start out with that wavelength business. Why did you make the promises you made? Why can't you fulfill those promises? And when will you hit those goals?

Question: David Barden - BofA Global Research (US) - Analyst : What percentage of people listening to you do you think know what a LATA is?

Question: David Barden - BofA Global Research (US) - Analyst : So that's super helpful. So to the answer to that question is then you kind of misunderstood where the demand was going to be. Why is the demand looking like it does and not the way you thought it would look?

Question: David Barden - BofA Global Research (US) - Analyst : No, that was good. I think I've gotten four questions, and we're almost done. So just quickly on the data centers, can you tell us a little bit what is the cost from upfront perspective to do this conversion of these legacy central offices into data center space that can actually be used by people who need real data center space? And can you give us any concrete examples of assets that have transacted that we can kind of get a baseline for what this could be worth? I mean, data center by data center.

Question: David Barden - BofA Global Research (US) - Analyst : It's a great place to leave it, Dave. Good conversation. Thank you so much as always. Appreciate it.

Question: David Barden - BofA Global Research (US) - Analyst : You got to -- this would take three days to get to. I appreciate it, as always. Thank you.