Raymond James sees AT&T announcement as negative for Cogent stock

Investing.com - Raymond James believes recent announcements from AT&T are "most negative" for Cogent Communications (NASDAQ:CCOI), according to a new analyst note.

The firm points specifically to Cogent’s efforts to enter the wavelength market with over 900 data centers it has enabled for wavelengths services. Cogent has previously stated it is targeting a $500 million annual run rate for its wavelength business by mid-2028. This ambitious growth target comes as established telecom giants like Verizon maintain stable revenue growth of 2.4% over the last twelve months.

Raymond James notes that Cogent focuses almost exclusively on the data center to data center segment, which the firm estimates represents approximately 35% of total industry demand for wavelength services.

Cogent is scheduled to report its third-quarter 2025 results on November 6, with Raymond James expecting the AT&T announcement to be "a significant topic" during the earnings call.

The firm’s comments come as Cogent continues its expansion efforts in the wavelength business, potentially facing new competitive challenges following AT&T’s announcement.

In other recent news, Verizon Communications has announced a leadership change with former PayPal CEO Dan Schulman taking over from Hans Vestberg as the new CEO. Schulman, who has a background in both technology and telecommunications, is expected to bring valuable expertise to Verizon. In addition, Verizon has entered into a definitive commercial agreement with AST SpaceMobile to provide space-based cellular broadband service across the continental United States, starting in 2026. This partnership marks a significant expansion of their strategic relationship announced earlier.

Further developments involve Verizon reportedly being in talks to acquire wireless spectrum from EchoStar, specifically the AWS-3 licenses used for 5G signals. This potential acquisition could enhance Verizon’s capabilities in the competitive 5G market. Meanwhile, Republican Senator Marsha Blackburn has requested information from the CEOs of T-Mobile, AT&T, and Verizon about subpoenas for phone data related to a Justice Department investigation. These inquiries concern whether the companies provided cell phone records of U.S. senators during the investigation into the January 6, 2021, Capitol riot.

In the broader broadband market, analyst firm Bernstein notes a shift towards a new oligopoly as fiber and fixed wireless access technologies gain ground against traditional cable services. This shift is challenging the dominance of companies like Charter Communications and Comcast, which currently serve a significant portion of broadband subscribers.

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