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Cogent (CCOI) Inks Deal to Buy T-Mobile's Wireline Business

Cogent Communications Holdings, Inc. CCOI recently inked a definitive agreement with T-Mobile US Inc. TMUS to acquire the latter’s wireline business for an undisclosed amount. The transaction is likely to close in the second half of 2023, subject to mandatory closing conditions and regulatory approvals.

The buyout will enable Cogent to strengthen its legacy wireline business with an ownership of network assets. These are likely to complement and gradually replace its own leased network assets, while focusing on the sales of optical wave transport services to new and existing customers.

T-Mobile has been mostly concentrating on its wireless businesses, and the vast wireline network it acquired from the Sprint merger was largely considered non-core assets. The strategic sale will facilitate the company to focus more on its core businesses. In addition, the companies will ink a separate agreement whereby Cogent will offer IP transit services to T-Mobile for 54 months for $700 million. T-Mobile will pay half the amount equally over 12 months post closure and the balance $350 million in equal payments over the remaining 42 months.

Being a leading provider of high-speed Internet access, Cogent benefits from cost-effective operations. The company offers a streamlined set of products, which helps eliminate redundant costs and gives greater pricing flexibility. It incurs relatively lower costs compared with competitors owing to the usage of Internet routers without additional legacy equipment.

Backed by efficient network expansion, it offers high-quality Internet service due to the highly economical metro and intercity network infrastructure. Its seamless network delivers high throughput, which reduces the frequency of data packets dropped during transmission compared with traditional circuit-switched networks, thereby creating more reliable and robust network infrastructure.

Operating as one of the world’s most interconnected Tier 1 networks, Cogent provides efficient on-network and off-network connectivity solutions to various Enterprise segments, including financial companies, educational institutions and law firms, at affordable costs.

The company offers state-of-the-art colocation data center services that provide continuous power supply and backup generators, making it ideal for disaster recovery and data backup. Its data centers are popularly known for providing a conducive environment for coherent connectivity, security, availability and performance to its end customers. The wireline network assets will further offer it a compelling opportunity to augment its market position.

The stock has lost 32.1% over the past year compared with the industry’s decline of 20.9%.

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Cogent presently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

TESSCO Technologies Incorporated TESS, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 61.9%, on average, in the trailing four quarters. Earnings estimates for TESSCO for the current year have moved up 31% since September 2021.

TESSCO offers products to the industry’s top manufacturers in mobile communications, Wi-Fi, wireless backhaul and related products. With more than three decades of experience, it delivers complete end-to-end solutions to the wireless industry.

Spirent Communications plc SPMYY carries a Zacks Rank #2. Earnings estimates for the current year for the stock have moved up 10.8% since September 2021, while that for the next year is up 11.8%.

Founded in 1936 and headquartered in Crawley, the United Kingdom, Spirent offers a comprehensive, end-to-end solution that validates forwarding performance, latency and functional capabilities in an integrated approach that reduces the cost of ownership. It is a leading provider of Ethernet validation solutions in the market.

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