Cogent Communications Holdings, Inc. (CCOI): A Bull Case Theory

We came across a bullish thesis on Cogent Communications Holdings, Inc. on Value Degen’s Substack’s Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on CCOI. Cogent Communications Holdings, Inc.'s share was trading at $19.99 as of December 2nd. CCOI’s trailing and forward P/E were 94.04 and 5.00k respectively according to Yahoo Finance.

Cogent Communications Holdings, Inc., through its subsidiaries, provides high-speed Internet access, private network, and data center colocation space services in North America, South America, Europe, Oceania, and Africa. CCOI recently faced a sharp market reaction following its earnings call, largely due to a temporary suspension of its share buyback and a significant cut to its quarterly dividend from $1.01 to $0.02, aimed at preserving capital while digesting the $20 billion T-Mobile/Sprint fiber acquisition.

This capital discipline is expected to remain in place until leverage falls from 7.4x to 4x EBITDA. Despite the headline concerns, the integration of the T-Mobile/Sprint assets is progressing well, with EBITDA improving as operational efficiencies are realized and low-margin Sprint contracts nearing completion.

Cogent continues to leverage its reputation as the most efficient operator in the laid fiber space, and management has guided a return to revenue growth, signaling an inflection point in performance. A key strategic lever lies in the company’s extensive data center portfolio, which grew from 53 to 100 facilities post-acquisition. Management has identified 24 redundant data centers for sale or long-term lease, with initial agreements already generating $144 million and multiple letters of intent in place. These divestitures are expected to accelerate deleveraging, potentially unlocking significant shareholder value once debt levels normalize.

Combined with improving revenue, margin expansion, and disciplined capital allocation, Cogent is positioned for a sustainable financial turnaround. While the dividend cut was a short-term setback, the cash proceeds from data center sales could have funded it for nearly a decade, highlighting the underlying strength of the business. At the current stock price of $23.49, CCOI offers a compelling risk/reward opportunity, supported by operational momentum, strategic asset monetization, and a pathway to meaningful capital returns once leverage targets are achieved.

Previously we covered a bullish thesis on Cogent Communications Holdings, Inc. (CCOI) by Aaron Chan in January 2025, which highlighted the network reconfiguration and ROADM-enabled wavelength network driving scalability. The company's stock price has depreciated approximately 72.62% since our coverage due to integration challenges. The thesis still stands as efficiency gains progress. Unemployed Value Degen shares a similar view but emphasizes near-term capital discipline, dividend cuts, and data center sales.

Cogent Communications Holdings, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held CCOI at the end of the second quarter which was 30 in the previous quarter. While we acknowledge the potential of CCOI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.