Cogent (CCOI) Plunges 14.29% as 98% Dividend Cut Fuels Deleveraging Push

On Nov. 20, 2025, Cogent Communications (CCOI) plunged 14.29% in pre-market trading following strategic disclosures from its Wells Fargo TMT Summit appearance. The telecom giant unveiled a dramatic 98% dividend cut to $0.02/share, redirecting capital toward deleveraging efforts targeting a 4.0x net leverage ratio. CEO Dave Schaeffer emphasized the necessity of these measures amid ongoing integration challenges from the Sprint acquisition.

The company's EBITDA has contracted sharply since the Sprint deal, with quarterly earnings plummeting from $60-65 million to $4 million. Cogent now faces a 24.2% compounded revenue decline in the acquired business, which accounts for 30% of total revenue. Despite these headwinds, management outlined expansion plans for its wavelength division, aiming to scale the 4% revenue segment to $500 million annually by 2028 through rapid 400-gigabit deployment in 500+ data centers.

Strategic asset optimization is central to Cogent's revised capital allocation. The company is actively evaluating sales or leases for 24 non-core data centers, with two already in advanced negotiations. Simultaneously, its IPv4 leasing business has emerged as a bright spot, achieving a $70 million annualized run rate. Corporate sales team attrition remains a concern, though the 850-strong field force continues to drive core business growth.

Backtest scenarios suggest a bearish bias persists until Cogent demonstrates progress on Sprint integration costs and wavelength adoption. A 12-month technical model shows potential for a 15-20% rebound if the wavelength business meets $100 million annualized run rate by Q4 2026, coupled with leverage ratio improvement to 4.5x. However, continued EBITDA contraction in the Sprint division could extend the current technical downtrend.