The telecommunications company will finance general operations through an unprecedented securitization backed by digital assets.
Cogent Communications Holdings, Inc. (NASDAQ: CCOI) has announced a groundbreaking financial operation in the sector: the issuance of debt notes secured by IPv4 addresses, leases of these addresses, and associated receivables. The transaction, valued at $174.4 million, is structured through an indirect special purpose subsidiary that is insulated from bankruptcy risk and includes a rate of 6.646% for five years.
This innovative structure, referred to as “IP address securitization”, is one of the first operations in which digital assets — in this case, IPv4 addresses — are used as collateral to support corporate financing.
Backed by Key Network Assets
According to the statement issued by the company, net proceeds from this operation will be allocated to general corporate purposes, without specifying a particular use. The transaction, still subject to customary closing conditions, is expected to conclude around April 11, 2025.
The securities are being offered in the U.S. only to qualified institutional buyers under Rule 144A of the Securities Act of 1933, or to accredited institutional investors under Regulation D. Outside the U.S., they are being sold to certain non-U.S. persons under Regulation S. As these instruments are not registered under securities laws, they cannot be freely traded in regulated markets.
A Pioneering Operation in a Scarce Asset Market
IPv4 addresses have become scarce and highly valued assets as the number of connected devices continues to grow and the deployment of IPv6 progresses slowly. Many companies rent these addresses to third parties, generating stable revenue streams that can now serve as collateral for complex financial products.
In the words of the industry, this is a way to monetize a limited and essential resource for modern telecommunications, while diversifying corporate funding sources.
Cogent: A Global Low-Cost Connectivity Provider
Cogent Communications is a global provider of high-speed internet and private network services targeting bandwidth-intensive businesses. Its optical technology-based network spans 264 markets worldwide.
Headquartered in Washington D.C., Cogent continues to expand its operations following the acquisition of Sprint’s intercity fiber network in the U.S. and other markets, a process that the company acknowledges has required complex integration and transitional services.
Risk Statement and Outlook
As is customary with such announcements, Cogent has included a comprehensive disclaimer regarding risks and future projections, including the possibility that the operation may not be completed, as well as macroeconomic factors such as inflation trends, equipment availability, regulatory environment, and the stability of its interconnection agreements.
The company does not commit to updating its forecasts but makes it clear that this operation represents a significant strategic step toward improving its financial position and continuing to compete in an increasingly demanding market.
With this initiative, Cogent joins the emerging trend of using digital assets as financial collateral, opening a new path at the intersection of telecommunications and structured finance.