Matthias Breuckmann

@NerdcapK I am still a shareholder but wondering: how can a CEO say this in May and not have this done by July?! „We intend our refinancing to be complete after the expiration of our make-whole period which ends June 15, 2026.“

$CCOI needs to ink a few more data center sales and get an update out on the bond refi.

@Gwanouradat @alphacenC @GoodHouseCap just to confirm: I am a shareholder and would love to increase my position but find it hard. There was an article in German news about Strategic Customer Agreements by Micron and Arista cementing prices until 2030 - therefore I fear the capex increase is for longer than hoped.

@Gwanouradat @alphacenC @GoodHouseCap I agree it may be a temporary increase in capex but now is the time they need cash flow the most. And it is, unfortunately, another layer of uncertainty on which we have to form a view but will only know several quarters into the future. Therefore hard to increase position.

$GOOG is out here raising $85bn to cover cash flow shortfall due to AI-related CAPEX meanwhile $CCOI is trading at multi-decade lows and below 10% of replacement cost 🤷‍♂️👀

@Gwanouradat @alphacenC @GoodHouseCap 13 being „half the anticipated decline“ and that is obvisouly purely core business related - the DC renovation capex went down as planned

@germanbonsai @alphacenC @GoodHouseCap Based on what apart from one quarter which you have unscientifically annualized to suggest a 40M annual increase?

@Gwanouradat @alphacenC @GoodHouseCap Part of the decrease in capex was due to their renovation of DCs last year which is done now, the LfL capex for the core business is increasing.

@germanbonsai @alphacenC @GoodHouseCap Not sure why you keep repeating this but it is incorrect. 1). Debt will decrease now DC sale is closed. 2). Capex is decreasing year over year, it had a one quarter spike but still decreased YoY like we replied in this chain. x.com/Gwanouradat/st…

@Gwanouradat @alphacenC @GoodHouseCap … and they only have 18months until TMUS payments run out

@Gwanouradat @alphacenC @GoodHouseCap What is your view? -> Net Debt / Ebitda is currently flat but they get usd 100m from TMUS p.a. + capex went up by >usd 40m p.a. due to component inflation. So they have to grow cash flow by 140 usd from here for net debt / ebitda to stay flat. That‘s huge vs current Ebitda

@GoodHouseCap I am a shareholder as well, so it would be great to get other views to form my own

@germanbonsai Once this data center sale closes, the cumulative cash burned since the close of the Sprint deal will have been 100% funded with TMUSA payments + DC sale proceeds. So net $0 capital deployed. Meanwhile EBITDA is +28% and growing since then

@GoodHouseCap I agree on this but I am concerned that Net Debt in absolute terms is growing every quarter and ND/Ebitda as well. Meanwhile capex has not been going up until now but will now and we do not know whether they can increase prices to offset.

@RecurveCapital Thank you very much for the answer

I wrote this a couple years ago: recurvecap.com/insights/hidde… My thoughts have evolved a bit since then. I think the world likely won’t shift to IPv6 because the technologies are good enough to use v4 much more effectively. Transaction prices are way down since I wrote this article, making sales much less attractive. The leasing business is better than I originally thought and has significant terminal value because once IP space is used, it is very rare to remember devices, so churn is extremely low. I like that Cogent is using wholesale partners to go faster in this business. Get the space leased up and then work on pricing over time.

Interesting presentation by Dave at $CCOI about AI, data centers, networks, and the internet. youtu.be/NlPo32qAio4?is…

@NerdcapK Have you looked at the future of the ipv4 business? When will we see ipv4 vs ipv6 replacement in cogent numbers? Do you think this is ultimately a shrinking business? Thank you very much!

$CCOI 2027 bonds are functionally trading at par. Market seems to be punishing Cogent everyday the DC transaction doesn't close.

@NerdcapK @FerdSoler @RecurveCapital I am trying to set-up a group discussion with some of these. Still waiting to see who would be interested.

@germanbonsai @FerdSoler @RecurveCapital We know they added to their position a bit recently and they're passive vs activist. Know anything else?

@NerdcapK @FerdSoler @RecurveCapital Did anybody compare notes with the hedge funds in the name, eg Park West Asset Management LLC?

@FerdSoler @RecurveCapital We should know a lot more after the 22nd. If the DC sale closes the $$ should be buying back underwater bonds quickly. I expect another DC sale on deck quickly. Real question is does Waves business meaningfully accelerate? Distressed debt is least interesting part of $ccoi

@NerdcapK Many thanks, I am concerned that we have no idea now regarding ROIC for this capex as long as we do not know the pricing in the market. At the same time, Lumen is also under pressure and could increase prices. Do we not have too many unknowns?

@germanbonsai Relevant for both unfortunately. Majority of those costs will be passed on imo

Could go faster with additional data center sales. Leverage sub 4x is clear line of site and I'd prefer to see additional balance sheet strength prior to dividend restoration. $CCOI

@RecurveCapital Many thanks, I am concerned that we have no idea now regarding ROIC for this capex as long as we do not know the pricing in the market. At the same time, Lumen is also under pressure and could increase prices. Do we not have too many unknowns?

@germanbonsai He has said equipment inflation caused prices to be about $12m higher if I recall. It’s for IP and for waves. I suspect it will eventually lead to a better pricing environment which will help growth, but not sure how long it would take to show up.

$CCOI's deal today was below my estimated value, but still quite positive for the balance sheet and credit story. Based on feedback today, these 10 facilities had annualized costs of $7m/year. If we run these proceeds through Cogent's playbook that I wrote about here (x.com/RecurveCapital…), leverage will declined by about 0.9x (lower debt and higher EBITDA from lower opex) and FCF will improve by at least $20m/year (lower opex + interest savings as they repurchase 6.5% notes). This should really help the equity going forward. Next step is the consents/amendments from bondholders which has been in motion for many weeks already, hopefully it won't be too long until we see that come through. Once the refi of the 2027s is done, Cogent will have years of runway before its next refi. By then, it won't matter anyway - they will be on much firmer footing. I am skeptical that 100% of the remaining facilities will sell (especially the ones <1 MW), but Fort Worth is the biggest one and probably the crown jewel of the whole portfolio to most buyers. I think an outcome in the $100-200 million range would be very positive, especially for EBITDA and FCF. Lower opex, more cash on the balance sheet. I am sure Cogent was reluctant to enter other LOIs until this deal went definitive since any of these 10 could have been bundled with the remaining 14 to make other deals. I would expect some pretty quick movement on the most attractive remaining DCs. I tried to map out what could happen as they make progress on all these fronts, starting from Q1 results and going through year-end, assuming they sell another $150M of DCs and get some on net growth driving EBITDA, plus additional synergies. In the end, this is step 1 in a journey toward lower leverage levels, but I'm not particularly interested in a distressed equity becoming non-distressed (although those situations generate good returns). We need the growth story to kick in for it to be a great story going forward.

@Mr_Neutral_Man Many thanks for all the content! What is your best guess on normalized annual FFO post Bloomberg renewal and Home Depot run-out?

This is possibly one of the greatest REIT dividend tax form one could possibly get. $ALX paid a $137 in dividends in 2012 after they sold a mall to Macerich. $122 in long term cap gains. We bought shares at $194 earlier this year after deeming it too cheap.