The deal for the Sprint wireline assets, a unit formerly known as Sprint Global Markets Group, provides a range of services, including MPLS (Cogent plans to convert those to VPLS and WAN), DIA (dedicated Internet access) and transit, wavelength and colocation services. The unit generated roughly $560 million in revenues in 2021 and has about 1,300 employees. In North America, the unit operates approximately 19,000 long-haul route miles, 1,300 metro route miles, and some 16,800 route miles of leased dark fiber. Total wireline business revenue was $739 million last year, according to Reuters.
Among other benefits, Cogent will also acquire a legacy Sprint customer base of about 1,400 businesses that, it claims, fall outside Cogent’s typical customer profile.
Cogent expects to offer customers the ability to migrate from their legacy MPLS VPN solutions to modern Ethernet / VPLS or SD-WAN / DIA solutions for their corporate needs. Cogent also expects to facilitate the migration of netcentric internet access customers from the T-Mobile Wireline Business (legacy Sprint) AS1239 to Cogent’s AS174.
Cogent expects its revenue base, post-close, to be $1.1 billion, or 180% of its current $600 million run-rate. Cogent likewise expects its multi-year revenue growth post-close will be 5% to 7% annually, with targeted aggregate revenue of over $1.5 billion by 2028.
A newly formed direct subsidiary of Cogent will consummate the acquisition. Cogent does not plan to issue new debt or equity in order to finance the acquisition, and the transaction is not expected to be dilutive to Cogent’s existing stockholders. Cogent plans to maintain its current dividend per share, which is expected to continue to increase over time.