CCOI

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How CCOI rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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words, now 42,225

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Factors that could cause or contribute to these differences include, but are not limited to: Our acquisition of Sprint Communications, now called Cogent Fiber, LLC, including difficulties integrating our business with the Cogent Fiber Business, which may result in the combined company not operating as effectively and efficiently as expected; government policies worldwide; vaccination and in-office requirements, delays in the delivery of network equipment or optical fiber, loss of key right-of-way agreements, future economic instability in the global economy, including the risk of economic recession and bank failures and liquidity concerns at certain other banks, which could affect spending on Internet services; the impact of changing foreign exchange rates (in particular the Euro to US dollar and Canadian dollar to US dollar exchange rates) on the translation of our non-US dollar denominated revenues, expenses, assets and liabilities into US dollars; legal and operational difficulties in new markets; our ability to maintain our regulatory licenses that are required in the markets in which we operate; the imposition of a requirement that we contribute to the US Universal Service Fund on the basis of our Internet revenue; changes in government policy and/or regulation, including rules regarding data protection, cyber security and net neutrality; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering and right-of-way arrangements on favorable terms; our ability to renew our long-term leases of optical fiber and right-of-way agreements that comprise our network; our reliance on a limited number of equipment vendors, and the potential for hardware or software problems associated with such equipment; our inability to obtain the equipment necessary for our expansion plans and customer requirements; tariffs imposed on equipment we purchase for our network or other similar government-imposed fees and charges; the dependence of our network on the quality and dependability of third-party fiber and right-of-way providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; our ability to make payments on our indebtedness as they become due and outcomes in litigation, risks associated with variable interest rates under our Swap Agreement as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, this Annual Report on Form 10-K for the year ended December 31, 2025 and our Quarterly Reports on Form 10-Q.
Acquisition of Cogent Fiber Business 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”, “Cogent Infrastructure”, “we” or “us”), 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 “Cogent Fiber 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”).
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, held Sprint Communications’ assets and liabilities relating to the Cogent Fiber Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).
As consideration for the Purchased Interests, the Working Capital Adjustment (primarily related to acquired cash and cash equivalents of an estimated $43.4 million at the Closing Date in order Page 38 of 104 to fund the international operations of the Cogent Fiber Business) resulted in us making a payment to the Seller of $61.1 million on the Closing Date.
Short-term Lease Payment The Purchase Agreement provides for a payment of $28.1 million ($19.8 million net of discount) from the Seller to us related to acquired short - term operating lease obligations (the “Short - term Lease Payment”).
Under the IP Transit Services Agreement., TMUSA paid us $100.0 million, $204.2 million and $204.2 million during the years ended December 31, 2025, 2024 and 2023, respectively.
Transition Services Agreement On the Closing Date, we entered into a transition services agreement (the “TSA”) with the Seller, pursuant to which the Seller provides to us, and we provide to the Seller on an interim basis following the Closing Date, certain specified services (the “Transition Services”) to ensure an orderly transition following the separation of the Cogent Fiber Business from Sprint Communications.
The services provided by the Seller to us include, among others, information technology support, back office and finance, real estate and facilities, vendor and supply chain management, including the payment and processing of vendor invoices for the Company and human resources.
The services provided by us to the Seller include, among others, information technology and network support, finance and back office and other wireless business support.
Amounts paid for the Cogent Fiber Business by T-Mobile are reimbursed at cost.
Amounts billed to us under the TSA are primarily for reimbursement at cost of payments to vendors of the Cogent Fiber Business until these vendors are fully transitioned to us.
Page 39 of 104 During the years ended December 31, 2025, 2024 and 2023, we were billed $0.4 million, $27.2 million and $284.1 million, respectively, as due to the Seller under the TSA.
During the years ended December 31, 2025, 2024 and 2023, we paid to the Seller $1.0 million, $93.8 million and $217.2 million, respectively, under the TSA.
During the years ended December 31, 2025, 2024 and 2023, we billed the Seller $0.2 million, $1.1 million and $6.2 million, respectively, as due from the Seller under the TSA.
During the years ended December 31, 2025, 2024 and 2023, the Seller paid us $0.2 million, $1.3 million and $6.0 million, respectively, under the TSA.
Severance reimbursement The Purchase Agreement also provides for reimbursement from the Seller to us for qualifying severance expenses incurred.
Under the CSA, we recorded service revenue of $2.6 million, $14.7 million and $23.9 million during the years ended December 31, 2025, 2024 and 2023, respectively.
Results of Operations Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024 In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024.
For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024.
The comparisons illustrated in the tables are discussed in greater detail below. Year Ended December 31, Percent 2025 2024 Change (in thousands) Service revenue $ 975,766 $ 1,036,104 (5.8) % Network operations expenses (1) 534,962 641,836 (16.7) % Selling, general, and administrative expenses (2) 274,436 275,781 (0.5) % Acquisition costs - Cogent Fiber Business — 21,407 NM Depreciation and amortization expenses 270,181 298,018 (9.3) % Gains on lease terminations and other 2,740 3,332 NM Interest expense, including changes in valuation of Swap Agreement 161,362 123,317 30.9 % Gain on bargain purchase – Cogent Fiber Business — 22,202 NM Loss on debt extinguishment and redemption – 2026 Notes 5,606 — NM Interest income – IP Transit Services Agreement 16,391 23,767 (31.0) % Income tax benefit 62,791 55,575 13.0 % (1) Includes non-cash equity-based compensation expense of $1,885 and $1,681 for 2025 and 2024, respectively.
Page 40 of 104 (2) Includes non-cash equity-based compensation expense of $24,532 and $24,057 for 2025 and 2024, respectively.
We continually work to grow our total service revenue by increasing the number of potential customers that we can reach on our IP Network and our Optical Wave Network.
We do this by investing capital to expand the geographic footprint of our networks, increasing the number of buildings that we are connected to, including CNDCs and MTOBs, and increasing our penetration rate into our existing buildings.
These efforts broaden the global reach of our networks and increase the size of our potential addressable market.
Our service revenue decreased by 5.8% from the year ended December 31, 2024 to the year ended December 31, 2025.
Exchange rates positively impacted our service revenue by $4.6 million.
All foreign currency comparisons herein reflect results for the year ended December 31, 2025 translated at the average foreign currency exchange rates for the year ended December 31, 2024.
Our total service revenue decreased primarily from the cancellation of low-margin and non-core customers we acquired with the Cogent Fiber Business, and a reduction in revenue under the Commercial Agreement with TMUSA, partially offset by the growth in customers from expanding our networks and offering wavelength services, adding additional buildings to our networks, increasing our penetration into the buildings connected to our networks and gaining market share by offering our services at lower prices than our competitors.
Page 41 of 104 Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees.
We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of comprehensive income (loss).
The impact of these taxes, including the Universal Service Fund, resulted in a decrease to our revenues of $1.3 million from the year ended December 31, 2024 to the year ended December 31, 2025. Year Months Ended December 31, Percent 2025 2024 Change Other Operating Data Revenue by Customer Type – (thousands) Corporate $ 427,752 $ 473,735 (9.7) % Net-centric 393,565 368,583 6.8 % Enterprise 154,449 193,786 (20.3) % Customer Connections by Customer Type - end of period Corporate 42,579 46,371 (8.2) % Net-centric 64,551 62,236 3.7 % Enterprise 10,513 14,776 (28.9) % Revenue – by Network Connection Type – (thousands) On-net $ 531,509 $ 544,628 (2.4) % Off-net 397,470 454,107 (12.5) % Wavelength 38,453 19,196 100.3 % Non-core 8,334 18,173 (54.1) % Customer Connections – by Network Connection Type - end of period On-net 87,944 87,500 0.5 % Off-net 24,656 28,963 (14.9) % Wavelength 2,064 1,118 84.6 % Non-core 2,979 5,802 (48.7) % Average Revenue Per Unit (ARPU) ARPU on-net $ $ (2.2) % ARPU off-net 1,235 1,153 7.1 % ARPU wavelength 2,014 1,798 12.0 % Average Price per Megabit installed base 0.17 0.24 (29.7) % NM - not meaningful Revenue and customer connections by customer type .
Our net-centric customers generally purchase their IP services on a price per megabit-metered basis and purchase their optical wavelength services on a per connection basis.
We began to serve enterprise customers in connection with our acquisition of the Cogent Fiber Business.
We believe that we are in a unique position to monetize the Cogent Fiber Business and its network, and we expect to achieve significant cost reduction synergies and revenue synergies from the Transaction.
On the Closing Date, with the Cogent Fiber Business we acquired: ● 17,823 corporate customer connections, ● 5,711 net-centric customer connections and ● 23,209 enterprise customer connections.
Page 42 of 104 We classified the $39.5 million of May 2023 Cogent Fiber Business monthly revenue as: ● $20.1 million of monthly recurring revenue as enterprise revenue, ● $12.9 million of monthly recurring revenue as corporate revenue and ● $6.5 million of monthly recurring revenue as net-centric revenue.
Revenues from our corporate, net-centric and enterprise customers represented 43.9%, 40.3% and 15.8% of total service revenue, respectively, for the year ended December 31, 2025 and represented 45.7%, 35.6% and 18.7% of total service revenue, respectively, for the year ended December 31, 2024.
Our revenue from our corporate customers decreased primarily due to cancellations of low margin and non-core corporate customers acquired with the Cogent Fiber Business.
We continue to see declining vacancy rates compared to their peak during the COVID-19 pandemic and rising office occupancy rates in certain markets in which we operate continuing a trend that began following the end of the COVID-19 pandemic.

and 421 more.

Gone since FY2024

Factors that could cause or contribute to these differences include, but are not limited to: Our acquisition of Sprint Communications (as defined below), including difficulties integrating our business with the Sprint Business, which may result in the combined company not operating as effectively and efficiently as expected; transition services required to support the Sprint Business and the related costs continuing for a period longer than expected, the COVID-19 pandemic and accompanying government policies worldwide; vaccination and in-office requirements, delays in the delivery of network equipment or optical fiber, loss of key right-of-way agreements, future economic instability in the global economy, including the risk of economic recession and recent bank failures and liquidity concerns at certain other banks, which could affect spending on Internet services; the impact of changing foreign exchange rates (in particular the Euro to US dollar and Canadian dollar to US dollar exchange rates) on the translation of our non-US dollar denominated revenues, expenses, assets and liabilities into US dollars; legal and operational difficulties in new markets; the imposition of a requirement that we contribute to the US Universal Service Fund on the basis of our Internet revenue; changes in government policy and/or regulation, including rules regarding data protection, cyber security and net neutrality; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering and right-of-way arrangements on favorable terms; our ability to renew our long-term leases of optical fiber and right-of-way agreements that comprise our network; our reliance on a limited number of equipment vendors, and the potential for hardware or software problems associated with such equipment; tariffs imposed on equipment we purchase for our network; the dependence of our network on the quality and dependability of third-party fiber and right-of-way providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; our ability to make payments on our indebtedness as they become due and outcomes in litigation, risks associated with variable interest rates under our Swap Agreement as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, this Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.
Acquisition of Sprint Communications 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”).
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, held Sprint Communications’ assets and liabilities relating to the Sprint Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).
As consideration for the Purchased Interests, the Working Capital Adjustment (primarily related to acquired cash and cash equivalents of an estimated $43.4 million at the Closing Date in order to fund the international operations of the Sprint Business) resulted in us making a payment to the Seller of $61.1 million on the Closing Date.
Page 33 of 96 Short-term Lease Payment The Purchase Agreement provides for a payment of $28.1 million ($19.8 million net of discount) from the Seller to us related to acquired short - term operating lease obligations (the “Short - term Lease Payment”).
Under the IP Transit Services Agreement., TMUSA paid us $204.2 million and $204.2 million during the years ended December 31, 2024 and 2023, respectively.
The interest rate used in determining the present value was derived considering rates on similar issued debt instruments with comparable durations, amongst other market factors.
Transition Services Agreement On the Closing Date, the Buyer entered into a transition services agreement (the “TSA”) with the Seller, pursuant to which the Seller provides to the Buyer, and the Buyer provides to the Seller on an interim basis following the Closing Date, certain specified services (the “Transition Services”) to ensure an orderly transition following the separation of the Sprint Business from Sprint Communications.
The services provided by the Seller to the Buyer include, among others, information technology support, back office and finance, real estate and facilities, vendor and supply chain management, including the payment and processing of vendor invoices for the Company and human resources.
The services provided by the Buyer to the Seller include, among others, information technology and network support, finance and back office and other wireless business support.
Amounts paid for the Sprint Business by T-Mobile are reimbursed at cost.
Amounts billed to us under the TSA are primarily for reimbursement at cost of payments to vendors of the Sprint Business until these vendors are fully transitioned to us. Page 34 of 96 During the years ended December 31, 2024 and 2023, we were billed $27.2 million and $284.1 million, respectively, as due to the Seller under the TSA.
During the years ended December 31, 2024 and 2023, we paid to the Seller $93.8 million and $217.2 million, respectively, under the TSA.
As of December 31, 2024 and December 31, 2023, we owed $0.5 million and $66.9 million, respectively, to the Seller under the TSA.
During the years ended December 31, 2024 and 2023, we billed the Seller $1.1 million and $6.2 million, respectively, as due from the Seller under the TSA.
During the years ended December 31, 2024 and 2023, the Seller paid us $1.3 million and $6.0 million, respectively, under the TSA.
As of December 31, 2024 and 2023, the Seller owed us $0.1 million and $4.5 million, respectively, under the TSA.
Severance reimbursement The Purchase Agreement also provides for reimbursement from the Seller to the Buyer for qualifying severance expenses incurred.
Under the CSA, we recorded service revenue of $14.7 million and $23.9 million during the years ended December 31, 2024 and 2023, respectively.
Results of Operations Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 In this section, we discuss the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023.
For a discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023.
The comparisons illustrated in the tables are discussed in greater detail below. Year Ended December 31, Percent 2024 2023 Change (in thousands) Service revenue $ 1,036,104 $ 940,922 10.1 % Network operations expenses (1) 641,836 544,232 17.9 % Selling, general, and administrative expenses (2) 275,781 275,318 0.2 % Acquisition costs - Sprint Business 21,407 18,492 15.8 % Depreciation and amortization expenses 298,018 232,209 28.3 % Gain on lease termination 3,332 — NM Interest expense, including change in valuation of Swap Agreement 123,317 93,344 32.1 % Gain on bargain purchase – Sprint Business 22,202 1,406,435 NM Interest income – IP Transit Services Agreement 23,767 26,796 (11.3) % Income tax benefit 55,575 53,964 3.0 % (1) Includes non-cash equity-based compensation expense of $1,681 and $1,069 for 2024 and 2023, respectively.
(2) Includes non-cash equity-based compensation expense of $24,057 and $25,855 for 2024 and 2023, respectively.
NM - not meaningful Page 35 of 96 Service Revenue .
We continually work to grow our total service revenue by increasing the number of potential customers that we can reach on our network.
We do this by investing capital to expand the geographic footprint of our network, increasing the number of buildings that we are connected to, including CNDCs and MTOBs, and increasing our penetration rate into our existing buildings.
These efforts broaden the global reach of our network and increase the size of our potential addressable market.
Our service revenue increased by 10.1% from the year ended December 31, 2023 to the year ended December 31, 2024.
Exchange rates negatively impacted our service revenue by $0.3 million.
All foreign currency comparisons herein reflect results for the year ended December 31, 2024 translated at the average foreign currency exchange rates for the year ended December 31, 2023.
Our total service revenue increased primarily due to the revenue acquired in May 2023 with the Sprint Business and the growth in customers from expanding our network, adding additional buildings to our network, increasing our penetration into the buildings connected to our network and gaining market share by offering our services at lower prices than our competitors.
These increases were partially offset by the cancellation of low margin and non-core customers we acquired with the Sprint Business, and a reduction in revenue under our CSA agreement with TMUSA.
Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, Universal Service Fund fees and certain state regulatory fees.
We record these taxes billed to our customers on a gross basis (as service revenue and network operations expense) in our consolidated statements of comprehensive income.
The impact of these taxes including the Universal Service Fund resulted in an increase to our revenues of $30.2 million from the year ended December 31, 2023 to the year ended December 31, 2024. Year Months Ended December 31, Percent 2024 2023 Change Other Operating Data Revenue by Customer Type – (thousands) Corporate $ 473,735 $ 443,939 6.7 % Net-centric 368,583 343,429 7.3 % Enterprise 193,786 153,553 26.2 % Customer Connections by Customer Type - end of period Corporate 46,371 54,493 (14.9) % Net-centric 62,236 62,370 (0.2) % Enterprise 14,776 20,740 (28.8) % Revenue – by Network Connection Type – (thousands) On-net $ 544,628 $ 512,936 6.2 % Off-net 454,107 393,493 15.4 % Wavelength 19,196 5,653 239.6 % Non-core 18,173 28,840 (37.0) % Customer Connections – by Network Connection Type - end of period On-net 87,500 88,291 (0.9) % Off-net 28,963 36,676 (21.0) % Wavelength 1,118 69.1 % Non-core 5,802 11,975 (51.5) % Average Revenue Per Unit (ARPU) ARPU on-net $ $ 3.2 % ARPU off-net 1,153 1,306 (11.7) % ARPU wavelength 1,798 1,425 26.2 % Average Price per Megabit installed base 0.24 0.27 (14.2) % Page 36 of 96 NM - not meaningful Revenue and customer connections by customer type .
Our net-centric customers generally purchase their services on a price per megabit-metered basis.
We began to serve enterprise customers in connection with our acquisition of the Sprint Business.
We believe that we are in a unique position to monetize the Sprint Business and its network and management expects to achieve significant cost reduction synergies and revenue synergies from the Transaction.
Revenue and pre-tax loss for the Sprint Business included in our consolidated statements of comprehensive income for the year ended December 31, 2023 were $283.3 million and $234.5 million, respectively.

and 458 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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