CFO Intelligence Magazine – Winter 2022
Sean Wallace
Cogent Communications Group CFO
Cogent Communications (2020 revenue $568 million) is one of the world’s largest Internet Services Providers focusing on the wholesale and business markets.
Founded in 2000, Cogent built its own data network to provide clients with online access instead of piggybacking on local phone or cable companies. The Company’s all-optical IP network provides services in more than 215 markets across 50 countries. This global model enables Cogent to offer highly reliable services at competitive pricing, says CFO Sean Wallace. A focus on business customers in multi-tenant office buildings across North America and Internet Application Service Providers, or Netcentric customers, in Carrier Neutral Data Centers represents another key Cogent strategy. This focus has enabled the company to continue to serve some of the largest, fastest growing business segments in the telecommunications sector. “If you are watching a movie on a streaming platform, it’s likely that part of that movie’s journey to your home was spent on the Cogent network,” says Wallace.
COPING WITH A DEFLATIONARY ENVIRONMENT
But Cogent also operates in a service industry that is experiencing consistent and constant pricing pressure. “As a result of this deflationary environment, we have been highly focused on being the low-cost operator and we look to drive out unnecessary costs in virtually every aspect of how we deliver services and operate our business,” he adds.
Examples of this low-cost mantra can be found in nearly every part of Cogent’s activities. “No one in the company has a secretary, and Cogent has steadfastly refused to expand its product line an activity that would probably dilute the company’s focus, service excellence, and drive up its costs structure,” he explains. “As part of this low-cost effort, the finance team is highly focused on systematically identifying and eliminating excess costs. The recent implemen[1]tation of process improvements and successful vendor negotiations related to leased circuits enabled Cogent to significantly reduce its circuit costs.”
Additionally, investigations into solar energy “led to the installation of a solar array on Cogent’s largest data center, which should reduce the company’s electricity costs by close to 5% when operational. We find that our finance team can be an exceptional partner with our operations team in the requirement to reduce our cost base.”