Cogent Communications (CCOI) TD Cowen 10th Annual Communications Infrastructure Summit summary

Industry trends and AI-driven demand

• AI is driving significant bandwidth demand, especially for large language model training, requiring robust data transport between remote computing and data centers.

• Data center growth is accelerating, constrained mainly by power availability, with a shift to using surplus power in existing markets.

• Data centers now consume 2%-3% of global electricity, with projections rising to 5%-6% due to AI.

• The need for new fiber builds is increasing as data centers seek surplus power locations.

• Bandwidth demand for both wavelengths and dark fiber is expected to rise as data centers proliferate.

Strategic priorities and service offerings

• Focus remains on growing the internet-based business, which accounts for 90% of revenue, including IP Transit, DIA, and VPN services.

• Expansion of transport services is prioritized, with a major push to enable 800 carrier-neutral data centers for rapid wavelength provisioning.

• Standardizing network architecture aims to reduce provisioning times for wavelength services from months to two weeks.

• Surplus dark fiber from the Sprint acquisition will be sold after wave enablement, but new construction is deprioritized due to low returns.

Revenue targets and market opportunity

• Current annualized waves revenue is under $15 million, with a target of $300 million by 2026 and $500 million by mid-2028.

• The addressable North American intercity optical transport market is estimated at $2 billion.

• Market share goals are based on both top-down (market size) and bottoms-up (sales force/account analysis) approaches.

• Sales funnel includes about 2,700 waves, with ARPU of $1,670, potentially reaching a $70 million run rate if fully converted.