I know the name decently well and think the comparison to LUMN is super interesting. The upside is potentially higher if waves can really get going which is the single biggest factor in driving value. The “hidden” assets “remaining data centers, IPV4, etc.” support the asset value/downside protection thesis even though CCOI doesn’t own nearly as much fiber as LUMN. Some mix shift benefit too as the bad sprint revenue rolls off. Finally, the debt problem getting pushed out + possible further paydown should be positive for the equity.
That said, valuation is more expensive, management credibility is questionable in my opinion (lots of over-promising), and I think scaling waves will be a slower process than many expect. I doubt much existing business shifts from LUMN/Zayo (high switching costs/risk combined with high GPU cost). The T-Mobile payments also roll off I believe at the end of 2027.
All told, think upside/downside skew on paper is great but the factors above make me a bit less convicted on the path to get there from a relative sense. Hope this helps!
Interesting analysis! I'm curious how you're thinking about rising prices of energy, labor, construction, and key commodities like copper, all of which are driven by AI Capex. With the US AI infrastructure market increasingly consolidating around a stable oligopsony, do you see these factors putting downward pressure on LUMN margins?
Thank you!! Interesting question, I think the input cost piece really impacts a couple things.
1) PCF builds: I’d think execution risk probably steps up in an inflationary environment. I’m not sure they earn the exact margin they target but it should still be healthy/not massively dilutive to company average.
2) On the Strategic segment: securing the bandwidth needed for waves (especially as we move from 400G to higher bandwidth) and inputs associated with that carries more execution risk the more those trends play out.
End of day it probably has the most impact on any area where Lumen has to build more/increase bandwidth. I think for NaaS it becomes more about adoption and for legacy of course harvesting cash as sensibly as they can.
So far seems like execution has been solid on the PCF side but absolutely something to watch for… one of these things where it isn’t a problem until it is all of a sudden
Thanks for the question! I’m long and it’s a high-conviction position for me, but I keep specific sizing private. Position sizing really depends on risk tolerance/one’s own situation/portfolio. I’d rather people size to their own situation than mine.
I may put a tracking portfolio together down the line but for now keep exact sizing to myself.
My thesis if correct would play out over a multi-year window rather than one catalyst. The key proof points are the EBITDA inflection in 2026 and the business revenue inflection in 2028, which is why I framed the scenarios out to 2029/2031.
So I think about it as a multi-year hold. That said if the stock were to run (good problem to have) that would change things of course as would the thesis breaking (legacy declines accelerating, pricing pressure, etc.).
this is a wonderful report..Thanks for sharing..
any comment for $POET $CCOI ?
Glad you found it helpful!
Cant speak much on $POET. As for $CCOI…
I know the name decently well and think the comparison to LUMN is super interesting. The upside is potentially higher if waves can really get going which is the single biggest factor in driving value. The “hidden” assets “remaining data centers, IPV4, etc.” support the asset value/downside protection thesis even though CCOI doesn’t own nearly as much fiber as LUMN. Some mix shift benefit too as the bad sprint revenue rolls off. Finally, the debt problem getting pushed out + possible further paydown should be positive for the equity.
That said, valuation is more expensive, management credibility is questionable in my opinion (lots of over-promising), and I think scaling waves will be a slower process than many expect. I doubt much existing business shifts from LUMN/Zayo (high switching costs/risk combined with high GPU cost). The T-Mobile payments also roll off I believe at the end of 2027.
All told, think upside/downside skew on paper is great but the factors above make me a bit less convicted on the path to get there from a relative sense. Hope this helps!
Very Nice Comment I like :-)
in 2025 $CCOI insders been enforced to dump big shares was the RED alert for some investor but this is a false alarming
Interesting analysis! I'm curious how you're thinking about rising prices of energy, labor, construction, and key commodities like copper, all of which are driven by AI Capex. With the US AI infrastructure market increasingly consolidating around a stable oligopsony, do you see these factors putting downward pressure on LUMN margins?
Thank you!! Interesting question, I think the input cost piece really impacts a couple things.
1) PCF builds: I’d think execution risk probably steps up in an inflationary environment. I’m not sure they earn the exact margin they target but it should still be healthy/not massively dilutive to company average.
2) On the Strategic segment: securing the bandwidth needed for waves (especially as we move from 400G to higher bandwidth) and inputs associated with that carries more execution risk the more those trends play out.
End of day it probably has the most impact on any area where Lumen has to build more/increase bandwidth. I think for NaaS it becomes more about adoption and for legacy of course harvesting cash as sensibly as they can.
So far seems like execution has been solid on the PCF side but absolutely something to watch for… one of these things where it isn’t a problem until it is all of a sudden
Great work so far. I've subscribed and look forward to reading future posts!
Thank you very much! Glad you enjoyed it!
What % does this stock make up in your portfolio?
Thanks for the question! I’m long and it’s a high-conviction position for me, but I keep specific sizing private. Position sizing really depends on risk tolerance/one’s own situation/portfolio. I’d rather people size to their own situation than mine.
I may put a tracking portfolio together down the line but for now keep exact sizing to myself.
No worries! How long do you plan on holding this position for?
My thesis if correct would play out over a multi-year window rather than one catalyst. The key proof points are the EBITDA inflection in 2026 and the business revenue inflection in 2028, which is why I framed the scenarios out to 2029/2031.
So I think about it as a multi-year hold. That said if the stock were to run (good problem to have) that would change things of course as would the thesis breaking (legacy declines accelerating, pricing pressure, etc.).