Cogent's Dividend Has Pushed It Into a Difficult Position

Cogent's narrow focus served it well for most of the past 20 years, but the 2023 Sprint asset acquisition has strained the business. The Sprint business brought a long-distance data network that increases the range of services Cogent can offer, but also included several unprofitable customer agreements that Cogent has had to work through. Clear signs of accelerating growth haven't materialized as quickly as hoped, and Cogent has generated very little cash flow over the past two years. With continued dividend payments, the debt load has more than doubled, hitting an uncomfortably high level that puts equityholders at risk.