You should read the following discussion and analysis together with our condensed consolidated financial statements and related notes included in this report. The discussion in this report contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this report should be read as applying to all related forward-looking statements wherever they appear in this report. Factors that could cause or contribute to these differences include those discussed in “Item 1A. Risk Factors,” as well as those discussed elsewhere. You should read “Item 1A. Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those discussed here. 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; 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, as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year 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”).
Purchase Price
On the Closing Date, we consummated the Transaction pursuant to the terms of the Purchase Agreement, providing a purchase price of $1 payable to the Seller for the Purchased Interests, subject to customary adjustments, including working capital (the “Working Capital Adjustment”), as set forth in the Purchase Agreement. 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 Cogent Fiber Business) resulted in us making a payment to the Seller of $61.1 million on the Closing Date. In April 2024, an additional Working Capital Adjustment of $5.0 million was paid to the Seller.
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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”). The Short - term Lease Payment will be paid from the Seller to us in four equal payments in months 55 to 58 after the Closing Date. The final determination of the Short-term Lease Payment was completed in April 2024. The Short-term Lease Payment was recorded at its present value resulting in a discount of $8.4 million. The interest rate used in determining the present value was derived considering rates on similar issued debt instruments with comparable durations, among other market factors. The determination of the discount rate required some judgment.
IP Transit Services Agreement
On the Closing Date, we entered into an agreement for IP transit services (“IP Transit Services Agreement”), pursuant to which TMUSA will pay us an aggregate of $700.0 million, consisting of (i) $350.0 million in equal monthly installments of $29.2 million per month during the first year after the Closing Date and (ii) $350.0 million in equal monthly installments of $8.3 million per month over the subsequent 42 months. Under the IP Transit Services Agreement, TMUSA paid us $33.3 million during the three months ended June 30, 2026 and $58.3 million during the six months ended June 30, 2026. The $8.3 million payment scheduled for July 2026 was paid on June 30, 2026. Under the IP Transit Services Agreement, TMUSA paid us $25.0 million during the three months ended June 30, 2025 and $50.0 million during the six months ended June 30, 2025.
We accounted for the Transaction as a business combination under ASC Topic 805 Business Combinations (“ASC 805”). We evaluated what elements are part of the business combination and the consideration exchanged to complete the acquisition. Under ASC 805, we concluded that the $700.0 million of payments to be made represented consideration received from T-Mobile to complete the acquisition of a distressed business. We also evaluated whether the IP Transit Services Agreement was in the scope of ASU No. 2014-09 Revenue from Contracts with Customers (“ASC 606”). We concluded that T-Mobile did not represent a “customer” as defined by ASC 606, the stated contract price did not represent consideration for services to be delivered, and the transaction did not satisfy the definition of revenue, which excluded this arrangement from the scope of ASC 606. As a result, and considering statements made by T-Mobile, the IP Transit Services Agreement was recorded in connection with the Transaction at its discounted present value resulting in a discount of $79.6 million. The interest rate used in determining the present value was derived considering rates on similar issued debt instruments with comparable durations, among other market factors. The determination of the discount rate required some judgment.
Competitive Advantages
We believe we address many of the data communications needs of a diverse group of businesses, communications service providers and other bandwidth-intensive organizations by offering high-quality, high-speed Internet access, optical transport and optical wave services, and private network services at attractive prices. We believe that our organization has the following competitive advantages:
Low Cost of Operation. We believe that the wireline telecom industry is undergoing, and will continue to face, significant price deflation for its applications and services. This price deflation is a result of a variety of factors including increased competition, enhanced substitutability of certain products and services and increased capabilities and greater efficiency in the technology used to provide services. Faced with the backdrop of continued price deflation in our industry, we have made a series of discrete choices around our network design, operating strategy and product offerings that are consistent with our objective of becoming the low-cost operator in our industry. Since our initiation of operations, this strategy has resulted in a rapid decline in our cost to transmit bits, which has increased our margins and decreased our capital intensity, excluding capital expenditures for the repurposing of acquired Sprint assets, as measured by our capital expenditures per total revenues.
Important components of our low-cost operating strategy include:
● One IP Network Protocol. Upon our founding, we selected Ethernet protocol to operate our network that provides Internet - based services (our “IP Network”). We made this selection in order to take advantage of the significantly greater installed base and lower cost of Ethernet network equipment versus other protocols, the substantially lower costs associated with operating and maintaining one network protocol and the continued benefits of the rapid price performance ratio improvements of Ethernet-related equipment. 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
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coaxial networks incur related to provisioning, monitoring and maintaining multiple transport protocols. 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 over 380 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. On average, a modest number of our dark fiber leases come up for renewal each year. In addition, with our acquisition of the Cogent Fiber Business, we now own a nationwide domestic fiber network (the “Sprint Network”). 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. 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 predominantly using the fiber that is owned by Cogent Fiber and leased to our operating subsidiary, Cogent Communications, LLC under a long-term IRU. 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 Cogent Fiber 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 June 30, 2026, we offered this service in 1,137 wave-enabled locations 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 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, virtual private network (“VPN”) connection to cloud providers services and our decision to continue to support MPLS based VPN services for our acquired former Sprint customers are consistent with this strategy. Consistent with this strategy, we have pared, and continue to pare, non-core services acquired with the Cogent Fiber 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. We continue the process of optimizing our IP network and optical wave network for historical IP-based Internet services and optical wave (optical transport services), respectively. This process 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 networks. 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 in each network. 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 networks. We design and build all of our network hubs, points of presence, and data centers to the same standards and configurations. This replication strategy provides us scale benefits in equipment purchases, training, and maintenance.
● Greater Control and Superior Delivery. Our on-net service, whether provisioned on our IP Network or our optical wave network, does not rely on circuits that must be provisioned by a third-party carrier. In our on-net MTOBs, we provide our customers their entire network connection, 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, 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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The vast majority of our on-net Internet and VPN services can be installed in less than two weeks, which is materially faster than the installation times for some of our incumbent competitors. We are able to install our optical wave services, on average, in thirty business days or less, which we believe provides a competitive advantage.
● High-Quality, Reliable Service. We are able to offer high-quality Internet service due to our network design and composition. We believe that we deliver a high level of technical performance because our IP Network is optimized for packet routed traffic. Its design increases the speed and throughput of our IP Network and reduces the number of data packets dropped during transmission compared to traditional circuit-switched networks. We believe that our IP Network is more reliable and carries traffic at lower cost than networks providing similar services that were originally built as overlays to traditional circuit-switched, or TDM networks. With respect to our optical wave services, we believe that our optical wave network offers advantages over other optical networks through its location along railroad rights of way and burial deeper than industry norms. We believe these two factors result in fewer cable cuts, and, as result, fewer service interruptions and a more reliable product offering.
● Large Addressable Market. 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, the costs to connect buildings to our network and equipment availability.
Our IP Network is connected to a total of 3,627 buildings that are located in 308 metropolitan markets globally. These buildings include:
● 1,867 large MTOBs (totaling over 1.0 billion square feet of office space);
● 1,781 CNDCs located in 1,588 buildings;
● 88 of our own AC powered Cogent data centers; and
● 84 of our smaller DC powered Cogent edge data centers.
Our MTOBs are located 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. Our CNDCs are located in North America, Europe, Asia, South America, Oceania and Africa where our net-centric customers directly interconnect with our network.
Our optical wave network is connected to 1,137 wave enabled locations located in 150 metropolitan markets in the United States, Canada and Mexico. All of our wavelength services are on-net as they originate and terminate on our optical wave network. Our Cogent data centers, including our Cogent Edge data centers, are directly connected to our network and operate across the United States and in Europe, and comprise 1.5 million square feet of floor space, and 155 MW of power.
We believe that these network points of presence strategically position our networks to attract high levels of Internet traffic and maximize our revenue opportunities and profitability.
Balanced, High-Traffic IP Network. Since its inception, our IP Network has grown significantly in terms of its geographic reach, customer connections, and traffic.
We currently serve:
● 7,572 access networks, as well as numerous large and small content providers;
● 65,556 net-centric customer connections,
● 41,326 corporate customer connections, and
● 8,957 enterprise customer connections.
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Because of the number of customers who distribute (content providers) and receive (access networks) content on our IP Network, we believe that the majority of all the traffic remains “on-net” by both originating and terminating on our IP 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 IP 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 with other Tier 1 networks on a settlement-free basis. This Tier 1 network peering status broadens our geographic delivery capability and materially reduces our network costs.
Proven and Experienced Management Team. Our senior management team is composed of seasoned executives with extensive expertise in the telecommunications industry as well as knowledge of the markets in which we operate. The members of our senior management team have an average of over 20 years of experience in the telecommunications industry and many have been working together at the Company for several years. 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 IP Network and, later, our optical wave network, led the integration of network assets we acquired through 14 significant acquisitions 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 Cogent Fiber Business have similar experience and tenure in both the telecommunications industry and at the Cogent Fiber Business. We believe that our management team has and will continue to successfully manage the integration of the Cogent Fiber Business into our current operations.
Our Strategy
We intend to remain a leading provider of high-quality, high-speed Internet access and private network services and to continue to improve our profitability and cash flow. The principal elements of our strategy include:
Grow our Corporate Customer Base. Our on-net corporate customers are typically small to medium-sized businesses connected to our IP Network through MTOBs or connected to our IP Network or our optical wave network through one of our on-net CNDCs. We generally sell two types of services to our corporate customers: dedicated internet access and private network services. We sell a small amount of optical wave services to our corporate customers. We typically sell dedicated internet access at the same price per connection as our competitors, but our customers benefit from our significantly faster speeds and rapid installation times. These customers are increasingly integrating off-site data centers and cloud services into their IT infrastructure in order to take advantage of the safety, security and redundancy that is offered by locating company processing power, storage and software at a data center. An important part of this new infrastructure is a high-speed, dedicated internet connection from the corporate premises to the data center and the Internet and from one corporate premises to other corporate premises. We believe that the importance of data centers will increasingly lead tenants to reconfigure their communications infrastructure to include dedicated Internet access across their locations.
Expand our Profitable Business with Enterprise Customers. In conjunction with our acquisition of the Cogent Fiber Business, we acquired a number of larger enterprise customers. We have continued to provide our core services to these enterprise customers and elected to provide MPLS based VPN as well as VPLS services, a new service for these customers, but continue to terminate unprofitable services to these customers at the end of their current term. We have also elected to terminate certain unprofitable customer locations and, in limited circumstances, ceased providing services in certain countries where we could not do so economically.
Increase our Share of the Net-Centric IP Market. 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 IP 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 one of the broadest CNDC footprints in the industry and currently offer network services in 58 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 IP Network, which differentiates the capacity choices we provide our net-centric customers;
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● 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 IP Network thereby reducing latency and enhancing reliability; and
● 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.
Increase our Share of the Optical Wavelength Market. We offer 10 Gbps, 100 Gbps and 400 Gbps optical wavelength and optical transport services to our net-centric customers who require these high-bandwidth dedicated point-to-point services. We intend to become one of the leading providers of optical wavelength services in North America. Building upon the foundation provided by the assets of the Cogent Fiber Business, we have created, and continue to expand, our optical wave network to provide optical wavelength services to hyper-scalers and other net-centric customers who require optical wave services.
We believe that we offer our customers the following:
● Diverse routes – Our optical wave network is located along rights of way that are largely unique. As such, we offer route diversity and geographic redundancy to our customers.
● Ubiquitous Footprint – We offer optical wavelength services in 1,137 locations in North America directly connected to our optical wave network. This broad footprint allows us to meet customers in locations of their choosing and to provide fully on-net optical wave services to them in these locations.
● Rapid Installation – We are typically able to install our optical wave services in less than 30 business days, far below the current industry norm. We believe that over time the percentage of our optical wave services that are installed in 30 business days or less will continue to grow.
● High Reliability – We believe our optical wave network suffers a lower frequency of interruptions and fiber cuts. The fiber in our optical wave network is largely buried along railroad lines, making it less susceptible to inadvertent cuts, and is buried deeper than newer networks with stronger sheathing, mitigating some of the damage caused by inadvertent cuts. We believe a lower frequency of fiber cuts results in more reliable service for the customer.
● Competitive Pricing – We have historically been a price leader in the markets in which we provide service. We intend to continue that position in the market for optical wavelengths and offer highly competitive pricing to our customers.
Pursue On-net Customer Growth to Corporate and Net - Centric Customers. Our high- capacity networks provide us with the ability to add a significant number of customers to either network, depending on the service offering, with minimal direct incremental costs. We intend to increase usage of our networks and operational infrastructure by adding customers in our existing on-net buildings, as well as developing additional markets connecting more MTOBs and CNDCs to our IP Network and connecting more CNDCs to our optical wave network. We emphasize our on-net services because they generate greater profit margins and we have more control over service levels, quality and pricing, and our on-net services are provisioned in considerably less time than our off-net services. Our networks connect directly to our on-net customers’ premises and we pay no local access (“last mile”) charges to other carriers to provide our on-net services.
Continue to Improve our Sales Efforts and Productivity. 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, 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. We also intend to leverage the skills and relationships of our sales force to sell our expanded service offerings, in particular, optical wavelength and optical transport services. We have developed several training programs that are directed toward increasing our sales representative tenure and increasing our sales representative productivity. In addition, when consistent with their job description and responsibilities, we require all of our employees to work in the office on a full-time basis, thereby providing additional opportunities for management coaching and oversight in order to increase productivity.
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Expand our Off-net Corporate and Enterprise Internet Access and VPN Business. We have agreements with over 820 national and international carriers providing us last mile network access to over 10 million commercial buildings that are lit by fiber optic cable in the countries we serve and that are not currently served by our network. We believe these agreements broaden our addressable market for corporate dedicated internet access and private network services and enhances our competitive position through the ability to provide enterprise-wide connectivity for corporate customers. In order to take advantage of this large set of commercial buildings, we have developed an automated process to enable our salesforce to identify opportunities in the off-net market for dedicated internet access and private network services and to quickly offer pricing proposals to potential customers. 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 Cogent Fiber Business, we expanded our service offerings to include optical wavelength and optical transport services over our optical wave network. We are selling these services to our existing customers, customers acquired with the Cogent Fiber 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 June 30, 2026, we offered wavelength services in 1,137 wave-enabled locations 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.
Expand our Data Center Footprint. In connection with our acquisition of the Cogent Fiber Business, we acquired multiple Sprint facilities that previously housed Sprint equipment. We evaluated the suitability of these facilities for conversion to commercial data center space and began repurposing suitable facilities. Repurposing these facilities included removing unused, obsolete equipment and racks, converting many locations from DC power to AC power, and upgrading or installing new HVAC systems, uninterruptible power supplies, backup generators and fire suppression systems as well as other structural changes. By June 30, 2026, we had converted the former Sprint facilities into 52 Cogent data centers and 87 Cogent edge data centers. In connection with this conversion process, we also decommissioned 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. Our IPv4 Issuer is our primary lessor of IPv4 address space with the remainder leased by our other operating subsidiaries. We also provide a small number of free IPv4 addresses to our dedicated Internet access customers. We currently own approximately 38 million IPv4 addresses. As of June 30, 2026, we were leasing 15.2 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.
Monetize Acquired Data Center Facilities. On June 29, 2026, we completed the sale of ten owned data center buildings and the associated land (the “Data Centers”) for a gross sales price of $225.0 million, paid in cash in full at closing. The Data Centers were acquired on May 1, 2023 in connection with our acquisition of the Cogent Fiber business. The net proceeds from the sale were $224.2 million and the net book value of the Data Centers was $93.4 on the closing date, resulting in a gain of $130.7 million.
We are actively marketing the sale or lease of the remaining 14 of 24 data center facilities originally acquired in the Transaction and identified to be sold.
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Results of Operations
Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025
Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality and variability of our service revenue, operating results and cash flows. The following summary table presents a comparison of our results of operations with respect to certain key financial measures. The comparisons illustrated in the table are discussed in greater detail below.
Three Months Ended
June 30, Percent
2026 2025 Change
(in thousands)
Service revenue $ 235,559 $ 246,247 (4.3) %
Network operations expenses (1) 125,006 137,492 (9.1) %
Selling, general, and administrative (“SG&A”) expenses (2) 72,096 64,924 11.0 %
Depreciation and amortization expenses 52,952 75,290 (29.7) %
Interest income – IP Transit Services Agreement 2,676 4,299 (37.8) %
Gains on sale of data center and other assets 132,041 — NM
Gain on debt extinguishment – 2032 Notes 1,579 — NM
Loss on debt extinguishment and redemption – 2026 Notes — 5,606 NM
Interest expense, including change in valuation of interest rate swap agreement 43,764 39,777 10.0 %
Income tax (provision) benefit (16,488) 16,718 NM %
(1) Includes non-cash equity-based compensation expenses of $97 and $506 in the three months ended June 30, 2026 and 2025, respectively.
(2) Includes non-cash equity-based compensation expenses of $7,545 and $4,158 in the three months ended June 30, 2026 and 2025, respectively.
NM – not meaningful
Service Revenue. 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 network, increasing the number of buildings connected to our network, 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. We also seek to grow our service revenue by investing in our sales and marketing team. We typically sell corporate connections at similar pricing to our competitors, but our customers benefit from our significantly faster speeds, greater aggregate throughput, enhanced service level agreements and rapid installation times. In the net-centric market, we offer comparable services in terms of capacity but typically at significantly lower prices.
Our service revenue decreased by 4.3% from the three months ended June 30, 2025 to the three months ended June 30, 2026. The decrease was primarily driven by cancellations of low margin and non-core customers we acquired with the Cogent Fiber Business partially offset by the growth in customers from expanding our network, increasing our wavelength service revenue, 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. Exchange rates positively impacted our service revenue from the three months ended June 30, 2025 to the three months ended June 30, 2026 by $0.7 million.
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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 condensed consolidated statements of comprehensive income. The impact of these taxes including the Universal Service Fund resulted in a decrease to our revenues of $1.1 million from the three months ended June 30, 2025 to the three months ended June 30, 2026.
Three Months Ended
June 30, Percent
2026 2025 Change
Other Operating Data
Revenue by Customer Type – (thousands)
Corporate $ 98,625 $ 109,047 (9.6) %
Net-centric 107,433 97,309 10.4 %
Enterprise 29,501 39,891 (26.0) %
Customer Connections by Customer Type - end of period
Corporate 41,326 44,307 (6.7) %
Net-centric 65,556 62,659 4.6 %
Enterprise 8,957 11,764 (23.9) %
Revenue – by Network Connection Type – (thousands)
On-net $ 135,368 $ 132,331 2.3 %
Off-net 84,487 102,177 (17.3) %
Wavelength 14,831 9,057 63.8 %
Non-core 873 2,682 (67.4) %
Customer Connections – by Network Connection Type - end of period
On-net 88,013 87,407 0.7 %
Off-net 23,033 26,239 (12.2) %
Wavelength 2,445 1,469 66.4 %
Non-core 2,348 3,615 (35.0) %
Average Revenue Per Unit (ARPU)
ARPU on-net $ 513 $ 506 1.3 %
ARPU off-net 1,197 1,267 (5.5) %
ARPU wavelength 2,100 2,163 (2.9) %
Average Price per Megabit installed base 0.11 0.17 (34.4) %
Revenue and customer connections by customer type. Our corporate customers generally purchase their services on a price per connection basis. 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 priced by a combination of distance, connection size and contract term. We began to serve enterprise customers in connection with our acquisition of the Cogent Fiber Business. We define “enterprise” customers as large corporations (typically, Fortune 500 companies with greater than $5 billion in annual revenue) running Wide Area Networks (“WAN”) with several dozen to several hundred sites. Our enterprise customers generally purchase our services on a price per location basis.
We believe that we are in a unique position to monetize the Cogent Fiber Business and its network, and we have achieved 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
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● 23,209 enterprise customer connections.
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 41.9%, 45.6% and 12.5% of total service revenue, respectively, for the three months ended June 30, 2026 and represented 44.3%, 39.5% and 16.2% of total service revenue, respectively, for the three months ended June 30, 2025.
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. Our corporate customers take advantage of our superior speeds, greater aggregate throughput, service levels and installation times compared to our competitors. Many companies have adopted a flexible work schedule permitting employees to fully or partially work from home. While these trends have adversely impacted overall occupancy rates, the impact of these vacancies have been partially offset by our corporate customers who are integrating some of the new applications that became part of the remote work environment, which benefits our corporate business as these customers upgrade their Internet access infrastructure to higher capacity connections. If and when companies discontinue flexible and remote work policies, they may return to the buildings in which we operate, and we believe it will present an opportunity for increased sales.
Our revenue from our net-centric customers increased, primarily due to growth in network traffic from our legacy net-centric customers partly offset by a reduction in revenue from net-centric customers acquired with the Cogent Fiber Business. Our net-centric customers purchase our IP services on a price per megabit basis and purchase their optical wavelength services on a per connection basis priced by a combination of distance, connection size and contract term. The net-centric market exhibits significant pricing pressure due to the continued introduction of new technology, which lowers the marginal cost of transmission and routing, and the commodity nature of the service where price is typically the only differentiating factor for these customers. Our average price per megabit of our installed base of customers decreased by 34.4% from the three months ended June 30, 2025 to the three months ended June 30, 2026. The impact of foreign exchange rates has a more significant impact on our net-centric revenues.
Our revenue from our enterprise customers decreased primarily due to a reduction in revenue from low-margin and non-core enterprise customers acquired with the Cogent Fiber Business.
On the Closing Date, we classified the total $39.5 million of monthly Cogent Fiber Business revenue as:
● $2.5 million of on-net revenue,
● $32.3 million of off-net revenue, and
● $4.7 million of non-core revenue.
Additionally, on the Closing Date, we classified the total 46,743 Cogent Fiber Business customer connections as:
● 1,560 on-net customer connections,
● 24,667 off-net customer connections, and
● 20,516 non-core customer connections.
Revenues from our on-net, off-net, wavelength and non-core customers represented 57.4%, 35.9%, 6.3% and 0.4% of total service revenue, respectively, for the three months ended June 30, 2026 and represented 53.7%, 41.5%, 3.7% and 1.1% of total service revenue, respectively, for the three months ended June 30, 2025.
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Our on-net revenues increased from the three months ended June 30, 2025 to the three months ended June 30, 2026, primarily from an increase in revenues from our legacy Cogent customers. Of the $39.5 million of monthly revenue we acquired with the Cogent Fiber Business acquisition, only 6.3% was on-net revenue.
Our off-net revenues decreased from the three months ended June 30, 2025 to the three months ended June 30, 2026 primarily from cancellations of low-margin off-net customers that we acquired with the Cogent Fiber Business. Of the $39.5 million of monthly revenue we acquired with the Cogent Fiber Business acquisition, 81.7% was off-net revenue.
In connection with our acquisition of the Cogent Fiber Business, we expanded our offerings of optical wavelength and optical transport services over our fiber network. Wavelength revenue was $14.8 million for the three months ended June 30, 2026 and $9.1 million for the three months ended June 30, 2025.
Our non-core revenues decreased from the three months ended June 30, 2025 to the three months ended June 30, 2026 from the cancellation of non-core revenues acquired in the Cogent Fiber Business. Non-core services are services, which we acquired and continue to support but do not actively sell. Of the $39.5 million of monthly revenue we acquired with the Cogent Fiber Business acquisition, we classified 11.9% as non-core revenue.
Network Operations Expenses. Network operations expenses include the costs of personnel associated with service delivery, network management and customer support, network facilities costs, right-of-way fees, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis. Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee’s salary and other compensation. The 9.1% decrease in network operations expense was primarily attributable to our efforts to reduce the network operations costs related to our acquisition of the Cogent Fiber Business. These costs primarily include leased circuit costs, including the reduction of the related “tail-circuit” costs for the reduction in off-net revenue and facilities costs.
Selling, General, and Administrative (“SG&A”) Expenses. Our SG&A expenses, including non-cash equity-based compensation expense, increased by 11.0% from the three months ended June 30, 2025 to the three months ended June 30, 2026. Our increase in SG&A operations expense was primarily attributable to increases in the amortization of prepaid commissions costs, certain property related taxes and a $2.8 million increase in non-cash equity-based compensation expense. Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation.
Depreciation and Amortization Expenses. Our depreciation and amortization expense decreased by 29.7%. The decrease was primarily due to assets acquired with the Cogent Fiber Business becoming fully depreciated, in particular acquired network equipment assets and assets sold with the sale of ten data centers, more than offsetting the increase in our deployed fixed assets.
Interest Income - IP Transit Services Agreement. Under the IP Transit Services Agreement TMUSA will pay us an aggregate of $700.0 million, consisting of (i) $350.0 million in equal monthly installments during the first year after the Closing Date and (ii) $350.0 million in equal monthly installments over the subsequent 42 months. The IP Transit Services Agreement was recorded in connection with the Transaction at its discounted present value resulting in a discount of $79.6 million. The amortization of the discount resulted in interest income of $2.7 million for the three months ended June 30, 2026 and $4.3 million for the three months ended June 30, 2025.
Gains on Sale of Data Center and Other Assets. On June 29, 2026, we completed the sale of ten owned data center buildings and the associated land (the “Ten Data Centers”) for net proceeds of $224.2 million, paid in cash in full at closing. The Ten Data Centers were acquired on May 1, 2023 in connection with our acquisition of the Cogent Fiber business. The net book value of the Ten Data Centers was $93.4 million on the closing date, resulting in a gain of $130.7 million included in the total gain of $132.0 million for the three months ended June 30, 2026.
Gain on Debt Extinguishment – 2032 Notes. In June 2026, we paid $19.3 million to repurchase $20.4 million of our $600.0 million 6.50% Senior Secured Notes due 2032 (the “2032 Notes”) at an average price of $91.955. In connection with these purchases we recognized a gain of $1.6 million in the three months ended June 30, 2026.
Loss on Debt Extinguishment and Redemption – Former 2026 Notes. On June 17, 2025 we issued our 2032 Notes. Our 2032 Notes were issued in connection with the extinguishment of our $500.0 million aggregate principal amount of our 3.50% Senior Secured Notes due 2026 (the “Former 2026 Notes”). The net proceeds from the 2032 Notes offering were $597.8 million after
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deducting offering expenses. We used $507.3 million of the net proceeds from the 2032 Notes offering to redeem in full, and satisfy and discharge our obligations under the Former 2026 Notes. The obligations under the Former 2026 Notes included the $500.0 million principal amount, a $5.0 million settlement payment and $2.2 million of accrued interest. As a result of the redemption of the Former 2026 Notes we incurred a loss on debt extinguishment of $5.6 million in the three months ended June 30, 2025.
Interest Expense - Including Change in Valuation of Swap Agreement. Our interest expense resulted from interest incurred on our:
● $500.0 million Former 2026 Notes issued in May 2021 until they were extinguished on June 17, 2025,
● $600.0 million 2032 Notes, (reduced to $579.6 million as of June 30, 2026), issued on June 17, 2025 in connection with the extinguishment of $20.4 million of our Former 2026 Notes,
● $174.4 million of 6.646% New IPv4 Notes issued in April 2025 and our $206.0 million of 7.924% Existing IPv4 Notes issued in May 2024 (collectively the “IPv4 Notes”),
● $300.0 million of 7.00% Senior Unsecured Notes due 2027 issued in June 2024 (the “2027 Mirror Notes”),
● $450.0 million of 7.00% Senior Unsecured Notes due 2027 issued in June 2022 (the “2027 Notes”),
● Our interest rate swap agreement until it expired in February 2026; and
● Our finance lease obligations.
Our interest expense increased by 10.0% from the three months ended June 30, 2025 to the three months ended June 30, 2026. Our interest expense increased primarily due to the April 2025 issuance of our New IPv4 Notes and the June 2025 issuance of our 2032 Notes issued for $100.0 million of additional principal amount and at a higher interest rate compared to our extinguished Former 2026 Notes.
Income Tax (Provision) Benefit. Our income tax provision was $16.5 million for the three months ended June 30, 2026. Our income tax benefit of $16.7 million for the three months ended June 30, 2025. The change was primarily related to projected operating results related to the Cogent Fiber Business acquisition, the reversal of deferred tax liabilities acquired with the Cogent Fiber Business and the impact of the gain on the sale of the Ten Data Centers in the three months ended June 30, 2026.
Buildings On-net. As of June 30, 2026 and 2025, we had a total of 3,627 and 3,529 on-net buildings connected to our network, respectively. The increase in our on-net buildings was a result of our disciplined network expansion program. We anticipate adding a similar number of buildings to our network for the next several years.
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Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025
Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality and variability of our service revenue, operating results and cash flows. The following summary tables present a comparison of our results of operations with respect to certain key financial measures. The comparisons illustrated in the tables are discussed in greater detail below.
Six Months Ended
June 30, Percent
2026 2025 Change
(in thousands)
Service revenue $ 474,746 $ 493,298 (3.8) %
Network operations expenses (1) 254,236 274,930 (7.5) %
Selling, general, and administrative (“SG&A”) expenses (2) 144,434 138,787 4.1 %
Depreciation and amortization expenses 107,008 151,328 (29.3) %
Interest income – IP Transit Services Agreement 5,769 8,984 (35.8) %
Gains on sale of data center and other assets 132,583 — NM
Gain on debt extinguishment – 2032 Notes 1,579 — NM
Loss on debt extinguishment and redemption – 2026 Notes — 5,606 NM
Interest expense, including change in valuation of interest rate swap agreement 87,637 73,971 18.5 %
Income tax (provision) benefit (5,049) 34,939 NM %
(1) Includes non-cash equity-based compensation expenses of $416 and $996 in the six months ended June 30, 2026 and 2025, respectively.
(2) Includes non-cash equity-based compensation expenses of $14,789 and $11,681 in the six months ended June 30, 2026 and 2025, respectively.
NM – not meaningful
Service Revenue. 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 network, increasing the number of buildings connected to our network, 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. We also seek to grow our service revenue by investing in our sales and marketing team. We typically sell corporate connections at similar pricing to our competitors, but our customers benefit from our significantly faster speeds, greater aggregate throughput, enhanced service level agreements and rapid installation times. In the net-centric market, we offer comparable services in terms of capacity but typically at significantly lower prices.
Our service revenue decreased by 3.8% from the six months ended June 30, 2025 to the six months ended June 30, 2026.. The decrease was primarily driven by the cancellation of low margin and non-core customers we acquired with the Cogent Fiber Business partially offset by the growth in customers from expanding our network, increasing our wavelength service revenue, 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. Exchange rates positively impacted our service revenue from the six months ended June 30, 2025 to the six months ended June 30, 2026 by $4.2 million
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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 condensed consolidated statements of comprehensive income. The impact of these taxes including the Universal Service Fund resulted in a decrease to our revenues of $1.8 million from the six months ended June 30, 2025 to the six months ended June 30, 2026.
Six Months Ended
June 30, Percent
2026 2025 Change
Other Operating Data
Revenue by Customer Type – (thousands)
Corporate $ 199,666 $ 219,735 (9.1) %
Net-centric 213,189 189,925 12.2 %
Enterprise 61,891 83,639 (26.0) %
Customer Connections by Customer Type - end of period
Corporate 41,326 44,307 (6.7) %
Net-centric 65,556 62,659 4.6 %
Enterprise 8,957 11,764 (23.9) %
Revenue – by Network Connection Type – (thousands)
On-net $ 270,935 $ 261,961 3.4 %
Off-net 173,522 209,452 (17.2) %
Wavelength 28,416 16,175 75.7 %
Non-core 1,873 5,710 (67.2) %
Customer Connections – by Network Connection Type - end of period
On-net 88,013 87,407 0.7 %
Off-net 23,033 26,239 (12.2) %
Wavelength 2,445 1,469 66.4 %
Non-core 2,348 3,615 (35.0) %
Average Revenue Per Unit (ARPU)
ARPU on-net $ 513 $ 499 2.8 %
ARPU off-net 1,213 1,265 (4.1) %
ARPU wavelength 2,101 2,084 0.8 %
Average Price per Megabit installed base 0.12 0.20 (40.6) %
Revenue and customer connections by customer type. Our corporate customers generally purchase their services on a price per connection basis. 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 priced by a combination of distance, connection size and contract term. We began to serve enterprise customers in connection with our acquisition of the Cogent Fiber Business. We define “enterprise” customers as large corporations (typically, Fortune 500 companies with greater than $5 billion in annual revenue) running Wide Area Networks (“WAN”) with several dozen to several hundred sites. Our enterprise customers generally purchase our services on a price per location basis.
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.
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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 42.1%, 44.9% and 13.0% of total service revenue, respectively, for the six months ended June 30, 2026 and represented 44.5%, 38.5% and 17.0% of total service revenue, respectively, for the six months ended June 30, 2025.
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. Our corporate customers take advantage of our superior speeds, greater aggregate throughput, service levels and installation times compared to our competitors. Many companies have adopted a flexible work schedule permitting employees to fully or partially work from home. While these trends have adversely impacted overall occupancy rates, the impact of these vacancies have been partially offset by our corporate customers who are integrating some of the new applications that became part of the remote work environment, which benefits our corporate business as these customers upgrade their Internet access infrastructure to higher capacity connections. If and when companies discontinue flexible and remote work policies, they may return to the buildings in which we operate, and we believe it will present an opportunity for increased sales.
Our revenue from our net-centric customers increased, primarily due to growth in network traffic from our legacy net-centric customers partly offset by a reduction in revenue from net-centric customers acquired with the Cogent Fiber Business. Our net-centric customers purchase our IP services on a price per megabit basis and purchase their optical wavelength services on a per connection basis priced by a combination of distance, connection size and contract term. The net-centric market exhibits significant pricing pressure due to the continued introduction of new technology, which lowers the marginal cost of transmission and routing, and the commodity nature of the service where price is typically the only differentiating factor for these customers. Our average price per megabit of our installed base of customers decreased by 40.6% from the six months ended June 30, 2025 to the six months ended June 30, 2026. The impact of foreign exchange rates has a more significant impact on our net-centric revenues.
Our revenue from our enterprise customers decreased primarily due to a reduction in revenue from low-margin and non-core enterprise customers acquired with the Cogent Fiber Business.
On the Closing Date, we classified the total $39.5 million of monthly Cogent Fiber Business revenue as:
● $2.5 million of on-net revenue,
● $32.3 million of off-net revenue, and
● $4.7 million of non-core revenue.
Additionally, on the Closing Date, we classified the total 46,743 Cogent Fiber Business customer connections as:
● 1,560 on-net customer connections,
● 24,667 off-net customer connections, and
● 20,516 non-core customer connections.
Revenues from our on-net, off-net, wavelength and non-core customers represented 57.1%, 36.5%, 6.0% and 0.4% of total service revenue, respectively, for the six months ended June 30, 2026 and represented 53.1%, 42.4%, 3.3% and 1.2% of total service revenue, respectively, for the six months ended June 30, 2025.
Our on-net revenues increased from the six months ended June 30, 2025 to the six months ended June 30, 2026, primarily from an increase in revenues from our legacy Cogent customers. Of the $39.5 million of monthly revenue we acquired with the Cogent Fiber Business acquisition, only 6.3% was on-net revenue.
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Our off-net revenues decreased from the six months ended June 30, 2025 to the six months ended June 30, 2026 primarily from cancellations of low-margin off-net customers and off-net customers in unlicensed markets that we acquired with the Cogent Fiber Business. Of the $39.5 million of monthly revenue we acquired with the Cogent Fiber Business acquisition, 81.7% was off-net revenue.
In connection with our acquisition of the Cogent Fiber Business, we expanded our offerings of optical wavelength and optical transport services over our fiber network. Wavelength revenue was $28.4 million for the six months ended June 30, 2026 and $16.2 million for the six months ended June 30, 2025.
Our non-core revenues decreased from the six months ended June 30, 2025 to the six months ended June 30, 2026 from the cancellation of non-core revenues acquired in the Cogent Fiber Business. Non-core services are services, which we acquired and continue to support but do not actively sell. Of the $39.5 million of monthly revenue we acquired with the Cogent Fiber Business acquisition, we classified 11.9% as non-core revenue.
Network Operations Expenses. Network operations expenses include the costs of personnel associated with service delivery, network management and customer support, network facilities costs, right-of-way fees, fiber and equipment maintenance fees, leased circuit costs, access and facilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis. Non-cash equity-based compensation expense is included in network operations expenses consistent with the classification of the employee’s salary and other compensation. The 7.5% decrease in network operations expense was primarily attributable to our efforts to reduce the network operations costs related to our acquisition of the Cogent Fiber Business. These costs primarily include leased circuit costs, including the reduction of the related “tail-circuit” costs for the reduction in off-net revenue and facilities costs.
Selling, General, and Administrative (“SG&A”) Expenses. Our SG&A expenses, including non-cash equity-based compensation expense, increased by 4.1% from the six months ended June 30, 2025 to the six months ended June 30, 2026. Our increase in SG&A operations expense was primarily attributable to increases in the amortization of prepaid commissions costs, certain property related taxes and a $3.1 million increase in non-cash equity-based compensation expense. Non-cash equity-based compensation expense is included in SG&A expenses consistent with the classification of the employee’s salary and other compensation.
Depreciation and Amortization Expenses. Our depreciation and amortization expense decreased by 29.3%. The decrease was primarily due to assets acquired with the Cogent Fiber Business becoming fully depreciated, in particular acquired network equipment assets and assets sold with the sale of ten data centers, more than offsetting the increase in our deployed fixed assets.
Interest Income - IP Transit Services Agreement. Under the IP Transit Services Agreement TMUSA will pay us an aggregate of $700.0 million, consisting of (i) $350.0 million in equal monthly installments during the first year after the Closing Date and (ii) $350.0 million in equal monthly installments over the subsequent 42 months. The IP Transit Services Agreement was recorded in connection with the Transaction at its discounted present value resulting in a discount of $79.6 million. The amortization of the discount resulted in interest income of $5.8 million for the six months ended June 30, 2026 and $9.0 million for the six months ended June 30, 2025.
Gains on Sale of Data Center and Other Assets. On June 29, 2026, we completed the sale of ten owned data center buildings and the associated land (the “Ten Data Centers”) for net proceeds of $224.2 million, paid in cash in full at closing. The Ten Data Centers were acquired on May 1, 2023 in connection with our acquisition of the Cogent Fiber Business. The net book value of the Ten Data Centers was $93.4 million on the closing date, resulting in a gain of $130.7 million included in the total gain of $132.6 million for the six months ended June 30, 2026.
Gain on Debt Extinguishment – 2032 Notes. In June 2026, we paid $19.3 million to repurchase $20.4 million of our $600.0 million 6.50% Senior Secured Notes due 2032 (the “2032 Notes”) at an average price of $91.955. In connection with these purchases we recognized a gain of $1.6 million in the six months ended June 30, 2026.
Loss on Debt Extinguishment – Former 2026 Notes. On June 17, 2025 we issued $600.0 million aggregate principal amount of our 6.50% Senior Secured Notes due 2032 (the “2032 Notes”). Our 2032 Notes were issued in connection with the extinguishment of our $500.0 million aggregate principal amount of our Former 2026 Notes. The net proceeds from the 2032 Notes offering were $597.8 million after deducting offering expenses. We used $507.3 million of the net proceeds from the 2032 Notes offering to satisfy and discharge our obligations under the Former 2026 Notes. The obligations under the Former 2026 Notes included the $500.0 million principal amount, a $5.0 million settlement payment and $2.2 million of accrued interest. As a result of the redemption of the Former 2026 Notes we incurred a loss on debt extinguishment of $5.6 million.
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Interest Expense - Including Change in Valuation of Swap Agreement. Our interest expense resulted from interest incurred on our:
● $500.0 million of our Former 2026 Notes issued in May 2021 until they were extinguished on June 17, 2025,
● $600.0 million of our 2032 Notes, (reduced to $579.6 million as of June 30, 2026), issued on June 17, 2025 in connection with the extinguishment of $500.0 million of our Former 2026 Notes,
● $174.4 million of our 6.646% New IPv4 Notes issued in April 2025 and our $206.0 million of 7.924% Existing IPv4 Notes issued in May 2024 (collectively the “IPv4 Notes”),
● $300.0 million of our 2027 Mirror Notes,
● $450.0 million of our 2027 Notes,
● Our interest rate swap agreement until it expired in February 2026, and
● Our finance lease obligations.
Our interest expense increased by 18.5% from the six months ended June 30, 2025 to the six months ended June 30, 2026. Our interest expense increased primarily due to the April 2025 issuance of our New IPv4 Notes, the June 2025 issuance of our 2032 Notes issued for $100.0 million of additional principal amount and at a higher interest rate compared to our extinguished Former 2026 Notes and our final $4.1 million payment on our interest rate swap agreement in February 2026.
Income Tax (Provision) Benefit. Our income tax provision was $5.0 million for the six months ended June 30, 2026. Our income tax benefit of $34.9 million for the six months ended June 30, 2025. The change was primarily related to projected operating results related to the Cogent Fiber Business acquisition, the reversal of deferred tax liabilities acquired with the Cogent Fiber Business and the impact of the gain on the sale of the Ten Data Centers in the three months ended June 30, 2026.
Buildings On-net. As of June 30, 2026 and 2025, we had a total of 3,627 and 3,529 on-net buildings connected to our network, respectively. The increase in our on-net buildings was a result of our disciplined network expansion program. We anticipate adding a similar number of buildings to our network for the next several years.
Liquidity and Capital Resources
Acquisition of Cogent Fiber Business – Cash Flow
The Cogent Fiber Business’s cash flow was negative at the time of negotiations and during its recent history. Due to the dire financial condition of the Cogent Fiber Business, it was understood that a payment from T-Mobile to any potential buyer would be required to execute a transaction to give a buyer sufficient cash inflow to offset losses that would be expected until a buyer could optimize the business. Based on management’s internal modeling at the culmination of the due diligence process, management determined this cash payment to be $700.0 million. Management intends to reduce the negative cash flow of the Cogent Fiber Business through the payments from the IP Transit Services Agreement, by reducing operating costs and by increasing revenue primarily by providing optical wavelength and optical transport services. We are selling these services to our existing customers, customers we acquired with the Cogent Fiber Business and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure. Our cash flow requirements related to the acquisition of the Cogent Fiber Business will be dependent upon our ability to reduce the acquired operating costs, our success in retaining the profitable acquired customers and our ability to sell optical wavelength and optical transport services over our optical wave network.
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Under the IP Transit Services Agreement, TMUSA will pay us an aggregate of $700.0 million, consisting of (i) $350.0 million in equal monthly installments of $29.2 million per month during the first year after the Closing Date and (ii) $350.0 million in equal monthly installments of $8.3 million per month over the subsequent 42 months. Through June 30, 2026, we received monthly payments totaling $566.7 million under the IP Transit Services Agreement, reflected as cash flows from investing activities in our consolidated statements of cash flows. As our business has grown as a result of an increasing customer base, the Transaction, broader geographic coverage and increased traffic on our network, we have historically produced a growing level of cash provided by operating activities. Since we closed the Transaction, we have experienced a reduction of cash provided by operating activities from the impact of the Transaction. The cash received from the IP Transit Services Agreement was designed to offset operating losses associated with the Cogent Fiber Business. Increasing our cash provided by operating activities is, in part, dependent upon our ability to reduce the operating costs of the Cogent Fiber Business while retaining its profitable revenue, expanding our geographic footprint and increasing our revenues from our wavelength and optical network services.
Liquidity and cash obligations
In assessing our liquidity, management reviews and analyzes our current cash balances, payments under the IP Transit Services Agreement, accounts receivable, accounts payable, accrued liabilities, capital expenditure commitments, and required finance lease and debt payments and other obligations.
We have had success in raising capital by issuing notes and arranging financing and entering into leases that have had a lower cost and more flexible terms. The combination of our operating performance and access to capital has enhanced our financial flexibility and increased our ability to make distributions to stockholders in the form of cash dividends or through share repurchases. Since our initial public offering, we have returned $1.8 billion to our stockholders through share repurchases and dividends. We will continue to assess our capital and liquidity needs and, where appropriate, return capital to our stockholders.
Over the next several years, we have significant contractual and anticipated cash outlays including our maturing debt obligations, interest payments on our debt obligations, our indicative dividend payments on our common stock and our projected capital expenditure requirements in order to help execute our business plan including the continued integration of the Cogent Fiber Business.
Our long-term debt interest obligations and maturity dates of our long-term debt obligations are as follows:
● Our $450.0 million 2027 Notes mature in June 2027 and include annual interest payments of $31.5 million until maturity,
● Our $300.0 million 2027 Mirror Notes mature in June 2027 and include annual interest payments of $21.0 million until maturity,
● Our 2027 Notes and our 2027 Mirror notes mature in June 2027 and, as a result, are considered current obligations as of June 30, 2026.
● Our $206.0 million Existing IPv4 Notes effectively mature in May 2029 (i.e., additional interest will accrue if we do not pay the Existing IPv4 Notes in full on the monthly payment date in May 2029) and include annual interest payments of $16.3 million until such date (which amount increases if the Existing IPv4 Notes are not repaid prior to May 2029),
● Our $174.4 million New IPv4 Notes effectively mature in April 2030 (i.e., additional interest will accrue if we do not pay the New IPv4 Notes in full on the monthly payment date in April 2030) and include annual interest payments of $11.6 million until such date (which amount increases if the New IPv4 Notes are not repaid prior to April 2030), and
● Our remaining $461.1 million of our 2032 Notes mature in July 2032.
● We have purchased $138.8 million of our original $600.0 million 2032 Notes below par at an average price of $90.348. This has reduced our annual interest payments on our 2032 Notes from $39.0 million to $30.0 million per year.
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We may need to, or elect to, refinance all or a portion of our indebtedness at or before maturity, and we cannot provide assurances that we will be able to refinance any such indebtedness on commercially reasonable terms or at all. In addition, we may elect to secure additional capital in the future, at acceptable terms, to improve our liquidity or fund acquisitions or for general corporate purposes. In addition, in an effort to reduce future cash interest payments as well as future amounts due at maturity or to extend debt maturities, we or our affiliates may, from time to time, issue new debt, enter into interest rate swap agreements, enter into debt for debt or debt for equity exchanges, or cash transactions to purchase our outstanding debt securities in the open market, through privately negotiated transactions or otherwise. We will evaluate any such transactions in light of the existing market conditions. The amounts involved in any such transaction, individually or in the aggregate, may be material. Repurchases or exchanges, if any, of our outstanding debt securities will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
In light of the economic uncertainties associated with the global economy, including due to the impact from tariffs and trade restrictions, the cash flow requirements of the Cogent Fiber Business, and the lingering impact of the COVID-19 pandemic our executive officers and Board of Directors have continued to carefully monitor our liquidity and cash requirements. Based on current circumstances, we decreased our quarterly dividend to $0.02 per share of common stock for the dividend that was paid in the fourth quarter of 2025. Any future determination regarding dividends, including a decision to increase our quarterly dividend, will be at the discretion of the Board and will depend on the Company’s financial condition, results of operations, capital requirements, any legal or contractual restrictions on the payment of dividends, and other factors the Board deems relevant. Given uncertainties regarding the potential impact of tariffs and trade restrictions, the global economy, lingering business impact of the pandemic, and the cash flow requirements of the Cogent Fiber Business, we will continue to monitor our capital spending. As we do each year, we will continue to monitor our future sources and uses of cash, and anticipate that we will adjust our capital allocation strategies when, as and if determined by our Board of Directors.
Refinancing of 2027 Notes and 2027 Mirror Notes
We believe we are able to timely service our debt obligations. We believe we will have access to additional capital from a variety of sources and the public capital markets for debt and equity.
We expect to refinance our 2027 Notes and 2027 Mirror Notes in the third quarter of 2026, subject to market conditions and other factors.
Cash, cash equivalents and restricted cash
As of June 30, 2026, we had cash, cash equivalents and restricted cash of $369.7 million. Restricted cash as of June 30, 2026 was $186.0 million. Restricted cash related to the amendment to our 2032 Notes was $147.6 million as of June 30, 2026, as discussed below. The net proceeds from our 2032 Notes, after the extinguishment and redemption of our 2026 Notes, were $92.8 million. The net proceeds of our $174.4 million New IPv4 Notes that we issued in April 2025 were $170.5 million of which $72.6 million was restricted. This restricted cash becomes available to us based upon improvements in our monthly leverage ratio and our debt service coverage ratio (as defined in the IPv4 Notes Indenture). During the six months ended June 30, 2026 and the year ended December 31, 2025, the restriction on $14.2 million and $26.9 million, respectively, of restricted cash was released primarily due to an improvement in our monthly leverage and debt service coverage ratios under the IPv4 Notes Indenture. Under the terms of the IPv4 Notes Indenture, we have until October 2026 to satisfy the performance metrics and unlock the remaining restricted funds. Any amounts remaining on deposit in the prefunding account after October 2026 will be withdrawn and applied to prepay the April 2025 IPv4 Notes on a pro rata basis based on the initial principal amount.
Gains on debt extinguishment – 2032 Notes
In June 2026, we paid $19.3 million to repurchase $20.4 million of our 2032 Notes at an average price of $91.955. In connection with these purchases we recognized a gain of $1.6 million in the six months ended June 30, 2026.
In July 2026, we paid $106.7 million to repurchase $118.4 million of our 2032 Notes at an average price of $90.071. In connection with these purchases, we will recognize a gain of approximately $11.8 million. These purchases resulted in a retirement of $118.4 par value of the 2032 Notes and a cumulative retirement of $138.8 million of the total $175.0 million of repurchases contemplated by the Supplemental Indenture.
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Supplemental Indenture – 2032 Notes
In the second quarter of 2026, we began to solicit consents from the holders of our 2032 Notes to implement revisions to our 2032 Notes indenture (the “Supplemental Indenture”). In order to be effective, approval of a majority of the holders of the outstanding par value of our 2032 Notes was required. In June 2026, we obtained the approval from a majority of the holders of our 2032 Notes who executed the Supplemental Indenture. We are required to pay a 12.5 basis point fee, totaling $0.5 million to the holders who executed the Supplemental Indenture.
The Supplemental Indenture to the 2032 Notes includes the following provisions:
● Amends the “Permitted Liens” definition therein to increase the secured leverage ratio under the “ratio liens” basket from 4.00 to 1.0 to 4.75 to 1.0;
● Requires us to contribute or otherwise provide to Group and/or one or more of our restricted subsidiaries the proceeds of certain data center sales and requires Group to use such proceeds solely to repurchase or otherwise retire existing indebtedness at a discount (with at least 50% of such proceeds being used to repurchase the 2032 Notes) (the “Debt Repurchases”);
o Debt Repurchases include the greater of a) $175.0 million or b) the “net proceeds” from the sale of the first ten former Cogent Fiber data centers (the “Data Center Proceeds”).
● Provides that the Data Center Proceeds will not be used to increase available restricted payment capacity under the 2032 Notes Indenture;
● Provides that Group will not make restricted payments constituting the dividend, distribution, sale, transfer or contribution of IRUs and prohibit any IRU that is owned or held by Group or any guarantor from being transferred to, assumed by or refinanced by any unrestricted subsidiary or any restricted subsidiary that is not a guarantor, subject to limited exceptions.
We sold ten data centers in June 2026 for net proceeds of $224.2 million. The Data Center Proceeds, as determined on an after-tax basis to the seller, from the sale of the ten data centers in June 2026 were approximately $168.0 million.
● As a result, $168.0 million of the Data Center Proceeds were considered restricted cash under the Supplemental Indenture and the remaining $57.0 million is available for general corporate purposes.
● We purchased $20.4 million par value of our 2032 Notes in the three months ended June 30, 2026. As a result, the balance of restricted cash related to our 2032 Notes was $147.6 million as of June 30, 2026.
o After June 30, 2026 we purchased an additional $118.4 million par value of our 2032 Notes reducing the restricted cash balance to $29.2 million.
● We will be required to include the next $7.0 million of Data Center Proceeds as restricted cash to reach the $175.0 million requirement under the Supplemental Indenture.
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Continued Impact of Changing Office Occupancy Rates
While we believe that demand for office space in the buildings in which we operate will remain among the strongest in the markets in which they are located, and that most employers will eventually require their employees to return to their offices on at least a hybrid basis, the timing and scope of a return to office, particularly in a number of key markets we serve, remains uncertain. In some markets, office occupancy rates may never return to pre-2020 levels. As a result, we may continue to experience increased customer turnover, fewer upgrades of existing customer configurations and fewer new tenant opportunities. These trends may negatively impact our revenue growth, cash flows and profitability.
Cash Flows
The following table sets forth our consolidated cash flows:
Six Months Ended June 30,
(in thousands) 2026 2025
Net cash provided by (used in) operating activities $ 18,029 $ (7,687)
Net cash provided by (used in) investing activities 197,718 (64,288)
Net cash (used in) provided by financing activities (45,346) 136,739
Effect of exchange rates changes on cash (5,839) 14,045
Net increase in cash and cash equivalents and restricted cash $ 164,562 $ 78,809
Net Cash Provided by (Used in) Operating Activities. Our primary source of operating cash is receipts from our customers who are billed on a monthly basis for our services. Our primary uses of operating cash are payments made to our vendors, payments to employees and interest payments made to our finance lease vendors and our note holders. Our changes in cash provided by operating activities are primarily due to changes in our operating profit and changes in our interest payments. Interest payments on our note obligations were $61.2 million and $48.0 million for the six months ended June 30, 2026 and 2025, respectively. Interest payments on our note obligations for the six months ended June 30, 2026 included our initial $21.0 million interest payment on our 2032 Notes.
Net Cash Provided by (Used in) Investing Activities. Our primary use of cash for investing activities is for purchases of property and equipment. Purchases of property and equipment were $84.8 million and $114.3 million for the six months ended June 30, 2026 and 2025, respectively. The changes in purchases of property and equipment were primarily due to the timing and scope of our network expansion and reconfiguration activities including geographic expansion, purchases related to our acquisition of the Cogent Fiber Business, costs associated with providing wave services, conversion costs related to acquired data centers and adding buildings to our network. The reduction in purchases of property and equipment from the six months ended June 30, 2025 to the six, months ended June 30, 2026 was primarily due to the completion of the conversion of the acquired data centers.
On the Closing Date, we entered into the IP Transit Services Agreement pursuant to which TMUSA will pay us an aggregate of $700.0 million, consisting of (i) $350.0 million in equal monthly installments during the first year after the Closing Date and (ii) $350.0 million in equal monthly installments over the subsequent 42 months. During the six months ended June 30, 2026 we were paid $58.3 million under the IP Transit Services Agreement. During the six months ended June 30, 2025 we were paid $50.0 million under the IP Transit Services Agreement.
On June 29, 2026, we completed the sale of ten owned data center buildings and the associated land (the “Ten Data Centers”) for net proceeds of $224.2 million, paid in cash in full at closing. The Ten Data Centers were acquired on May 1, 2023 in connection with our acquisition of the Cogent Fiber Business. The net book value of the Ten Data Centers was $93.4 million on the closing date, resulting in a gain of $130.7 million included in the total gain of $132.6 million for the six months ended June 30, 2026.
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Net Cash (Used in) Provided by Financing Activities. Our primary uses of cash for financing activities are for dividend payments, purchases of our common stock, redemptions of our debt obligations and principal payments under our finance lease obligations. Our primary sources of cash for financing activities are issuances of note obligations. During the six months ended June 30, 2026 and 2025 we paid $3.6 million and $98.7 million for our quarterly dividend payments, respectively. In the fourth quarter 2025, we reduced our quarterly dividend payment to $0.02 per share. Purchases of our common stock under our stock buyback program were $11.5 million for the six months ended June 30, 2025. There were no purchases of our common stock in the six months ended June 30, 2026. Principal payments under our finance lease obligations were $23.0 million and $16.5 million for the six, months ended June 30, 2026 and 2025, respectively. Changes in our principal payments under our finance lease obligations were primarily due to the timing and extent of our network expansion and reconfiguration activities including geographic expansion, purchases related to our acquisition of the Cogent Fiber Business associated with providing wave services and adding buildings to our network.
In June 2026, we paid $19.3 million ($18.8 million of discounted principal and $0.6 million of accrued interest) to repurchase $20.4 million of our original par value $600.0 million 6.50% Senior Secured Notes due 2032 (the “2032 Notes”) at an average price of $91.955. In connection with these purchases we recognized a gain of $1.6 million in the six months ended June 30, 2026.
We completed a series of debt issuances in the six months ended June 30, 2025.
On April 11, 2025 we issued $174.4 million aggregate principal amount of 6.646% secured IPv4 address revenue notes, Series 2025-1 Class A-2 (collectively, the “New IPv4 Notes”), with an anticipated repayment date in April 2030, in an offering exempt from registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”). The net proceeds of the New IPv4 Notes, after offering expenses were $170.5 million, of which $72.6 million was restricted cash. Certain of the restricted cash net proceeds becomes available to us based upon improvements in our monthly leverage ratio and debt service coverage ratio (both as defined in the IPv4 Notes Indenture). During the six months ended June 30, 2026 and the year ended December 31, 2025, the restriction on $14.2 million and $26.9 million, respectively, of restricted cash was released primarily due to an improvement in our monthly leverage and debt service coverage ratios under the IPv4 Notes Indenture.
Interest on the New IPv4 Notes is paid on a monthly basis. From and after the monthly payment date in April of 2030, principal payments will also be required to be made on the New IPv4 Notes on a monthly basis. No principal payments will be due on the New IPv4 Notes prior to the monthly payment date in April of 2030, unless certain rapid amortization, events of default, mandatory prepayment or acceleration triggers are activated.
On June 17, 2025 (the “2032 Notes Closing Date”), we issued $600.0 million of 2032 Notes in a private placement not registered under the Securities Act. The net proceeds from the offering were $597.8 million after deducting offering expenses. On the 2032 Notes Closing Date, we used $507.3 million of the net proceeds from the offering to redeem in full, and satisfy and discharge our obligations under our Former 2026 Notes. The obligations paid under the indenture governing our Former 2026 Notes included:
● $500.0 million principal amount,
● $5.0 million make-whole payment, and
● $2.2 million of accrued interest.
Cash Position and Indebtedness
At June 30, 2026, our total indebtedness, at par, was $2.3 billion and our total cash, cash equivalents and restricted cash ($186.0 million) was $369.7 million. Our total indebtedness at June 30, 2026 includes $630.2 million of finance lease obligations for dark fiber under long-term IRU agreements.
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Summarized Financial Information of Holdings
Neither Holdings nor any of its subsidiaries that is not also a subsidiary of Group is a “Restricted Subsidiary” as defined under the indentures governing our 2032 Notes, our 2027 Notes or our 2027 Mirror Notes (the “Indentures”). Holdings is a guarantor under these notes, but none of its subsidiaries that is not also a subsidiary of Group is a guarantor under these notes. Under the Indentures, we are required to disclose certain reasonably related information of Holdings and its subsidiaries that is not attributable to Group and its subsidiaries, relating to Holdings’ assets, liabilities and operating results (“Holdings Financial Information”). The Holdings Financial Information as of and for the three and six months ended June 30, 2026 is detailed below (in thousands):
As of June 30, 2026
Cash and cash equivalents $ 31,783
Restricted cash 38,371
Accounts receivable, net 5,834
Other current assets 11,773
Total current assets 87,761
Property and equipment, net 100,830
Right-of-use leased assets 50,932
Intangible assets, net 17,997
Deposits and other assets 7,471
Due from T-Mobile - Purchase Agreement 25,034
Total assets $ 290,025
Accounts payable $ 4,039
Accrued and other liabilities 41,718
Operating lease liabilities, current maturities 40,863
Total current liabilities 86,620
Operating lease liabilities 177,935
Due to Cogent Communications LLC 21,995
Senior secured IPv4 Notes 372,596
Deferred income tax liabilities 428,977
Other long-term liabilities 18,267
Total liabilities 1,106,390
Total stockholders’ deficit (816,365)
Total liabilities and stockholders’ deficit $ 290,025
Three Months Ended
June 30, 2026
Service revenue $ 14,748
Operating expenses:
Network operations 21,581
Selling, general, and administrative 19,391
Equity-based compensation expense 8,388
Depreciation and amortization 10,181
Total operating expenses 59,541
Gain on sale of data center assets 130,706
Operating income 85,913
Interest expense (7,513)
Interest income - Purchase Agreement 467
Interest income and other, net 582
Net income $ 79,449
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Six Months Ended
June 30, 2026
Service revenue $ 29,514
Operating expenses:
Network operations 42,603
Selling, general, and administrative 37,556
Equity-based compensation expense 16,671
Depreciation and amortization 21,516
Total operating expenses 118,346
Gains on sale of data center and other assets 131,262
Operating income 42,430
Interest expense (15,017)
Interest income - Purchase Agreement 925
Interest income and other, net 1,985
Net income $ 30,323
Stock Buyback Program
Our Board of Directors has approved purchases of shares of our common stock under a buyback program (the “Buyback Program”). There were no purchases of our common stock in the three or six months ended June 30, 2026. In the second quarter of 2025, we purchased 229,507 shares of our common stock for $11.5 million under the Buyback Program. As of June 30, 2026, there was a total of $105.8 million available under the Buyback Program that is authorized to continue through December 31, 2026.
Dividends on Common Stock and Return of Capital Program
On August 5, 2026, our Board of Directors approved the payment of our quarterly dividend of $0.02 per common share. This estimated $1.0 million dividend payment is expected to be made on September 4, 2026.
The payment of any future dividends and any other returns of capital, including stock buybacks, will be at the discretion of our Board of Directors and may be reduced, eliminated or increased and will be dependent upon our financial position, results of operations, available cash, cash flow, capital requirements, limitations under our Indentures and other factors deemed relevant by our Board of Directors. We are a Delaware corporation and under the General Corporation Law of the State of Delaware, distributions may be restricted including a restriction that distributions, including stock purchases and dividends, do not result in an impairment of a corporation’s capital, as defined under Delaware law. The Indentures limit our ability to return cash to our stockholders. See Note 3 of our interim condensed consolidated financial statements for additional discussion of limitations on distributions.
Future Capital Requirements
We believe that our cash on hand and cash generated from our operating activities and cash from the IP Transit Services Agreement will be adequate to meet our working capital, capital expenditure, debt service, dividend payments and other cash requirements for the next 12 months and beyond the next 12 months if we execute our business plan, which includes the refinancing of our 2027 Notes and our 2027 Mirror Notes.
Any future acquisitions or other significant unplanned costs or cash requirements in excess of amounts we currently hold may require that we raise additional funds through the issuance of debt or equity. Our 2027 Notes and our 2027 Mirror Notes will mature in June 2027. Subject to market conditions and other factors, we expect to refinance the 2027 Notes and 2027 Mirror Notes in the third quarter of 2026, which we expect will require us to issue additional indebtedness. We cannot assure you that such financing will be available on terms acceptable to us or our stockholders, or at all. Insufficient funds may require us to delay or scale back the number of buildings and markets that we add to our network, reduce our planned increase in our sales and marketing efforts, reduce our planned dividend payments, or require us to otherwise alter our business plan or take other actions that could have a material adverse effect on our business, results of operations and financial condition. If issuing equity securities raises additional funds, substantial dilution to existing stockholders may result.
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We may need to, or elect to, refinance all or a portion of our other indebtedness at or before maturity and we cannot provide assurances that we will be able to refinance any such indebtedness on commercially reasonable terms or at all. In addition, we may elect to secure additional capital in the future, at acceptable terms, to improve our liquidity or fund acquisitions or for general corporate purposes. In addition, in an effort to reduce future cash interest payments as well as future amounts due at maturity or to extend debt maturities, we or our affiliates may, from time to time, issue new debt, enter into debt for debt or debt for equity exchanges, or cash transactions to purchase our outstanding debt securities in the open market, through privately negotiated transactions or otherwise. We will evaluate any such transactions in light of the existing market conditions. The amounts involved in any such transaction, individually or in the aggregate, may be material.
Off-Balance Sheet Arrangements
We do not have relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these relationships.
Critical Accounting Estimates
Management believes that as of June 30, 2026, there have been no material changes to our critical accounting policies and significant estimates from those listed in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our annual report on Form 10-K for the year ended December 31, 2025.