Good morning, and welcome to the Cogent Communications Holdings Fourth Quarter and Full-Year 2015 Earnings Conference Call. As a reminder, this conference call is being recorded, and it will be available for replay at www.cogentco.com. I would now like to turn the call over to Mr. Dave Schaeffer, Chairman and Chief Executive Officer of Cogent Communications Holdings.

Thank you, and good morning to everyone on the call. Welcome to our fourth quarter 2015 earnings conference call. I'm Dave Schaeffer, Cogent's Chief Executive Officer. With me on this morning's call is Tad Weed, our Chief Financial Officer. We are pleased with our results for this quarter and for the full year, and are optimistic about the strength of our business and the outlook for full-year 2016. We achieved annual revenue growth on a constant currency basis of 10.8% for the full year, and quarterly revenue growth on a constant currency basis of 12.1% year-over-year from the fourth quarter of 2015. For the quarter, we achieved our year-over-year quarterly traffic growth of 38%. And sequential EBITDA as adjusted, margin expansion of 150 basis points, and a 5% increase in our sales force rep productivity to 6.3 units per full-time equivalent rep per month. This is the highest level of rep productivity in the company's history. During the quarter, we returned over $60 million to our shareholders through our regular quarterly dividend. As posted on our website, 100% of our $66.3 million of dividends in 2015 should be treated as a return of capital and 0% should be treated as taxable dividends for U.S. federal income tax purposes. At year-end, we had a total of $47.8 million available in our stock authorization buyback program, which is authorized to continue through December 2016. We continue to remain confident in the growth potential and cash generating capabilities of our business. As a result, as indicated in our press release, we announced another sequential increase in our regular quarterly dividend from $0.35 per share to $0.36 per share on a quarterly basis. This is our 14th consecutive increase in our regular quarterly dividend. Our constant currency basis, our revenue growth from the fourth…

Thank you, Dave, and good morning, everyone. This earnings conference call includes forward-looking statements. These forward-looking statements are based upon our current intent, belief, and expectations. These forward-looking statements and all other statements that may be made on this call that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Please refer to our SEC filings for more information on the factors that could cause actual results to differ. Cogent undertakes no obligation to update or revise forward-looking statements. If we use any non-GAAP financial measures during this call, you will find these reconciled to the GAAP measurement in our earnings release, which is posted on our website at cogentco.com. Now, I'll turn the call back over to Dave.

Okay. Thanks, Tad. Hopefully, you've had a chance to review our earnings press release. Our earnings press release does include a number of historical metrics that hopefully you will find helpful. We continue to anticipate that our full-year revenue growth for 2016 versus 2015 on a constant currency basis will be well within our long-term guidance range of 10% to 20% annual revenue growth. On a constant currency basis, our quarterly revenue growth increased year-over-year by 12.1% from the fourth quarter of 2014 to the fourth quarter of 2015 and for full-year 2015 versus full-year 2014 by 10.8%. Our EBITDA as adjusted increased by 6.9% from the third quarter of 2015 to the fourth quarter to $36.8 million. Our EBITDA as adjusted margin increased from the third quarter of 2015 to the fourth quarter of 2015 by 150 basis points sequentially and was 34.9%. Our gains on equipment transactions in 2015 were $5.4 million, consistent with an expectation of about $5 million and compared to gains in 2014 of $11 million. Gains on equipment transactions in the fourth quarter were $2 million as compared to $1.2 million in the third quarter of 2015 and $2.8 million in the fourth quarter of 2014. We anticipate that our equipment gains for 2016 will be less than 2015 and we will return to 200 basis points year-over-year EBITDA margin expansion as adjusted for 2016 over 2015. Our revenue and EBITDA guidance are intended to be long-term in nature and not intended to be used as specific quarterly guidance. Our EBITDA as adjusted is impacted by the amounts of our equipment gains or in our legal expenses related to net neutrality. Now, Tad will cover some additional financial details as our results for the quarter.

Thanks again, Dave, and again, good morning to everyone. I would also like to thank and congratulate the Cogent team for their results and their continued hard work and efforts during another very busy quarter and also a very busy year for the company. On Corporate and NetCentric revenue, we analyze our revenues based upon product class which is on-net, off-net and non-core, and we also analyze our revenues based upon customer type. We classify all of our customers into two types, that's NetCentric customers and Corporate customers. Our NetCentric customers buy large amounts of bandwidth from us in carrier-neutral data centers. And our Corporate customers buy bandwidth from us in large, multi-tenant office buildings. Revenue from our Corporate customers grew by 3.3% from the third quarter to $62.6 million and grew by 17.9% from the fourth quarter of last year. Revenue from our NetCentric customers increased from the third quarter by 0.3% to $42.5 million and decreased by 2.5% from the fourth quarter of last year. This NetCentric year-over-year decrease was primarily due to the $3.3 million year-over-year negative impact of foreign exchange on our fourth quarter revenues. Our European revenue is almost entirely NetCentric revenue. And accordingly, it is particularly vulnerable to the impact of variations in foreign exchange. If you calculate our NetCentric revenue growth on a constant currency basis, it grew by 5% from the fourth quarter of last year to the fourth quarter of this year. Revenue and customer connections by product class. Our on-net revenue was $76.5 million for the quarter, which was a sequential increase of 1.9%, and an increase of 7.3% from the fourth quarter of last year. Our on-net revenue was $294.8 million for the year, which was an increase of 4.6%. Our on-net customer connections increased at an accelerated rate…

Thanks, Tad. I want to just take a moment and chat about the scale and size of our network. It continues to grow. We have over 821 million square feet of multi-tenant office space in North America directly connected to our network with in-building riser facilities. Our network consists of over 28,100 metro fiber miles and 56,000 route miles of intercity fiber. The Cogent network is one of the most center-connected networks in the world with direct connectivity to 5,580 other networks. Approximately 30 of these networks are settlement-free peers. The remaining 5,550 networks are actually Cogent paying customers. We currently are utilizing about 30% of the lit capacity on our network. We routinely augment portions of our network to maintain these low utilization levels. We operate in 51 Cogent-controlled data centers with approximately 565,000 square feet of raised floor space. In summary, we believe that Cogent is the low-cost provider of Internet access transit services. Our value proposition to our customers remains unmatched in the industry. Our business remains completely focused on the Internet and IP connectivities and data center colocation services, and these services provide a necessary utility to our customers. We expect our annualized constant currency long-term revenue growth rate to be within our historical rates and that is to be 10% to 20% revenue growth, and our long-term EBITDA margin expansion rates to continue to be approximately 200 basis points per year. We have incurred material legal and economic analyses fees related to net neutrality and we spent $600,000 in the fourth quarter of 2015 and $3.7 million for the full year supporting net neutrality. Nearly 100 basis points of EBITDA went to our legal expenses. We believe that we will continue to incur some fees in 2016, but we also expect these fees for 2016 to be less than full-year 2015. Our board of directors has approved yet another regular increase in our dividend to $0.36 per share per quarter. Our dividend increase demonstrates our commitment to the business and our optimism around the cash flow generating capabilities of our business. We will be opportunistic about the timing and purchase for our common stock. At the end of the quarter, we have $47.8 million remaining under our current buyback program, which runs through December 2016, but may be limited due to certain debt covenants that we have until our gross leverage falls below 4.25 to 1. We are committed to returning increasing amounts of capital to our shareholders on a regular basis. The nearly $106 million that we returned in 2015, I think, demonstrates that commitment. With that, I'd like now to open the floor for questions.

Thank you. And our first question comes from the line of Eric Pan with JPMorgan. Your line is now open.

Hey, guys. Thanks for taking the question. Just want to talk a little bit about the NetCentric revenue. It was down slightly quarter-over-quarter. Can you give us some color on the slowdown given an expected increase from the AT&T and Verizon port upgrades in 3Q?

Yeah. Sure, Eric. It's Dave. So the revenue growth on a year-over-year basis was very similar to the previous quarter at 5%. 48% of that traffic lies outside of the U.S. So the biggest impact was the continued FX pressure that we've had. Our average price per megabit declined but at a more moderate than historically. Our traffic growth, sequentially, was consistent with the previous quarter at 11% quarter-over-quarter. And on a year-over-year basis, the 38% was effectively equivalent to the 39%. It was literally a second decimal place difference in the growth rate. So net-net, we believe that we are on the path to returning to historical average growth rates in our NetCentric business. We have never said it would be a quick or easy process. As we add port capacity under our various interconnection agreements, the two parties in each of the agreements try in good faith to estimate how many ports are necessary. We install those ports, fortunately for Cogent, our provisioning times are much quicker than that of our counterparties so we oftentimes have to wait on them to provision their ports. And then traffic begins to flow. We have seen that in the first several rounds of augments with our initial peers, the ports immediately filled up. At that point, we analyze the traffic, we sit down under the agreements that are in place and in good faith negotiate the next round of augments, and it is an iterative process. And as we've commented publicly, a couple of the peers have achieved completely congestion-free status in all locations at being Comcast and AT&T. Some of the others such as Verizon, CenturyLink and Time Warner Cable, while agreements are in place, and I'm fully confident we will become congestion-free, in the initial rounds of augments, those ports immediately filled up and in some markets ports remain congested even as additional ports are being added. The net takeaway here is that we will return to our historical growth rates, but it will probably take several quarters. The 5% year-over-year growth rate is a material improvement from the negative growth rate that we were experiencing at the maximum point of port congestion, and is still not yet at the 10% year-over-year average that we've historically been able to achieve.

So with Comcast and AT&T having been able to get to congestion-free within a quarter, do you feel like some of the operators are dragging their feet?

I want to hope that everyone is operating in good faith. There are typically deadlines included in our agreement. So I don't think they may be intentionally doing that. But quite honestly, many of the larger companies have a very byzantine and cumbersome process for turning up high-capacity interfaces. And I think this is not just for peers, but I've heard that from customers who buy from those companies too, that they're often frustrated. Remember at Cogent, we guarantee every customer nine days to turn up – or 17 days to turn up service. And we actually achieve nine days. We're very unique in the industry. So I think it's more their process than necessarily malicious on their part.

Got it. And then maybe you can give us an update on your negotiations with Orange and Telefónica and your lawsuit with Deutsche Telekom.

Sure. Just quickly, we've gotten some additional ports with Orange. We are in negotiations but there is still not agreement. Our – Telefónica, we have a letter of intent, and we believe that'll be converted to a binding agreement shortly. And then finally with Deutsche Telekom, we actually have a settlement-free peering agreement that requires them to upgrade and they have breached the agreement and we chose to sue them in Federal Court and that court is – or that suit in process in front of the court. And while we would like them to honor the agreement and turn up capacity as the agreement dictates, we will withdraw the suit. But so far we've seen no motions. So we think this will probably be fully adjudicated.

Got it. Thank you for taking the question.

Hey, thanks, Eric.

Thank you. And our next question comes from the line of Colby Synesael with Cowen & Company. Your line is now open.

Great. I was hoping you could give us a little bit of color on your expectations for CapEx in 2016 and beyond, I know there'd been an expectation that CapEx over the long-term would continue to come down. But quite honestly, CapEx is lower in 2015 and we're anticipating. And then also as part of that, what your expectations are for a capital lease principal payments? You mentioned in 2015, they're about $20 million. Curious where that could potentially go in 2016? And then my other question, the $12 million of quarterly distribution, the optionality if you will, sometimes you've done that in the dividends, sometimes you've done that in a buyback. Obviously, that was paused as it relates to the leverage requirements in terms of your various debt baskets. When do you think that that might be turned back on and how much of a priority is that for both the company and the board to do so? Thanks.

Sure, Colby. Thanks for the questions. Let me try to take – you've got three of them there. So in terms of CapEx, you really do need to look at both CapEx and principal payments together and look at the totality of that number. It did come down year-over-year, and I think it will be down again in 2016. I think the principal payment portion of the total will be approximately the same, roughly about $20 million. But in aggregate, we think the long-term trend line is down for both CapEx and principal payments of capital leases. Now, with regard to the guarantee commitment to buyback. First of all, we've had buybacks long before we had a guarantee commitment to buy back and use those on a regular basis. We also had this $12 million commitment to shareholders and often exceeded it in a quarter. Last year, for example, there was one quarter I know we spent over $19 million in the quarter. We've returned nearly $400 million to investors since implementing a buyback and dividend program. That return has been roughly $220 million in buybacks and about $175 million in dividends. We are committed to the dividend strategy particularly encouraged by the tax efficiency of it with 100% of our 2015 dividend being tax deferred and treated as a return of capital. With regard to improving our gross leverage, we do believe we will do that sequentially over this year. And sometime in 2016, we will be below the 4.25 to 1 limitation that then allows us to access our builder basket. We have about $115 million in that basket today. We have $203 million of cash in aggregate. And that basket will probably build over the next several quarters to about $140 million or so. As soon as we fall below that 4.25 to 1 at the operating company level, we will transfer that money internally to the holding company, which removes it from the builder basket and then, gives us greater flexibility in terms of dividends and buybacks. I think the commitment to return capital has been demonstrated with a 10-year history of doing it. The exact mechanism, I think, the board will look at, and that will include the magnitude and timing of a quarterly commitment to buybacks.

Okay. Great. Thanks.

Hey, thanks, Colby.

Thank you. And our next question comes from the line of Michael Bowen with Pacific Crest. Your line is now open.

Thanks a lot for taking the questions. Good morning, Tad and Dave. So a couple of things. I was wondering if you could help us frame what you think is driving productivity with the sales reps. Obviously, a record quarter but also, can you give us some thoughts on productivity per rep from a revenue standpoint if you'd look at that? And then second question, with regard to the 200 basis points EBITDA increase, we haven't seen that really since 2013 over 2012, if I recall correctly. So a couple of sub-questions there. Which exact measurement are you talking about for EBITDA? Is that with asset sales, without? So you kind of get where I'm going with that. And then, if that is the case, where should we think about where that will be driven from, like, what line item should we be looking to adjust to get that margin increase? Thanks.

Okay. Those were excellent questions, Michael. Thanks. With regard to productivity, I think it's a combination of factors. It starts with underlying demand for our services which continues to be very robust. Two, it's been the dramatic improvement in our training programs and it's been the segmentation of the sales force to allow reps by appropriate tenure to focus on the correct accounts. All those initiatives and the detailed focus on productivity that Jim, I think, spreads throughout the team, has been very helpful in helping us increase our productivity on a unit basis. When you look at it on a dollar basis, we remain the lowest cost of revenue acquisition model in the industry, and pretty close to our historical trend lines with on-net Corporate, and on-net NetCentric revenue acquisitions costs at about $2 so to go (38:58) of monthly recurring revenue. And our off-net costs are higher than that. We expect those trends to continue even though ARPUs will decline. With regard to EBITDA, I'll take part of it, and Tad will take part of it. So first of all, we're talking about EBITDA as adjusted. We are going to sell some equipment but less this year than last year, just as we sold less in 2015 than we did in 2014. The margin expansion comes from the operating leverage in our business. On-net has very high contribution margins 95%; off-net, about 45%. And just to remind you, for nearly a decade from 2004 to 2012, our margins consistently increased at, at least 250 basis points a year. And for the past four years, we've seen a much more modest rate of margin expansion, more like 50 basis points on average. And there have been, really, three large impacts to our business. The first was the shutdown of our largest customer at that time Megaupload, which accounted for 11% of our NetCentric revenue, 5.5% of total revenues and nearly 25% of our EBITDA at that time they were shutdown. Secondly, this material movement in foreign exchange. And then third, the onslaught of a group of last-mile network operators constricting capacity and the need to spend money on net neutralities. So while revenues were under pressure, we also had increased legal expenses. All of those extra factors are reverting back to normal. And, I think, you saw that in the 150-basis point margin expansion this most recent quarter on a sequential basis and, I think, we'll see it going forward. I think Tad will talk a little bit about some of the other specific factors.

Right. So driving the margin expansion as Dave said, we did have 150 basis points improvement this quarter but it can be lumpy. And the items that have most variability – the revenue growth is pretty much consistent on a constant currency basis. But the level and timing of legal fees associated with our efforts on net neutrality can vary. We do expect it to be less this year than last year but it is somewhat of an unknown. The asset gain transactions, we expect it to be similar to last year but slightly less. But again, the timing of that can vary. So those are the items that are going to impact the EBITDA as adjusted calculation, which again, includes all the legal fees and includes any gains from asset-related transactions.

All right. Thanks.

Thank you. Our next question comes from the line of Nick Del Deo with MoffettNathanson. Your line is now open.

Okay. Hey, guys, thanks for taking my question. Circling back to NetCentric growth, given the pace of port augmentation you're seeing from the big access networks, how long do you think it's going to be before the U.S. is mostly or entirely cleaned up on that front?

Yeah. Sure, Nick. So again, it's this iterative process and quite honestly, we've gone to everyone of the counterparties with a projection of what we thought and in every case they thought we were too optimistic and after multiple rounds of augments, we were actually probably too conservative. And it's just because our traffic route is so much stronger than the industry average. I think you will see four out of the five completely resolved by the end of this quarter. I think the only access operator in North America that will still have meaningful congestion in certain markets by the end of this quarter will be CenturyLink. They have, I think, some of the slowest turn up processes of any of the five companies. As I said, AT&T and Comcast are free now. I think Verizon and Time Warner are working in good faith and we're in, I think, the third or fourth round of projections and augments. So it took a little while for them to gear up from a standstill, but I think we'll get there for four out of the five this quarter. And then hopefully, Century will be sometime early in Q2. But they had been a little slower.

Okay. And then as you think about the growth acceleration you expect in 2016, to what extent is that a function of the Internet connection capacity going online versus better sales performance within your NetCentric sales force?

I wish I could disaggregate and give you the exact answer, and the answer is it's somewhat iterative and that as we have more capacity, the sales force is able to go to new and existing customers and warranty that traffic going to certain of those networks will perform with better metrics. Now, I do think both the addition of extra NetCentric salespeople and the training and account segmentation are meaningful in helping us. But unless there is resolution to the congestion, it would only help with a portion of the traffic. So I think the answer is it's both. And I clearly acknowledge that we've improved from where we were, but 5% is not 10% growth. And while we are comfortably in our growth targets for the whole business, it's really been the Corporate business that's carrying the bulk of the load. And we expect that to continue very strong. But I do think you'll see improvement over the next several quarters and return that NetCentric growth back to historical norms.

Okay. And then maybe one last follow-up. You've talked about consolidation from 10-gig to 100-gig ports. Did that play a role at all in the sequential growth or is that just not terribly material?

It actually did. So if you noticed, Tad mentioned that unit churn on-net ticked up slightly. And we've actually had a couple of other fairly material customers that had a large number of 10-gig ports consolidate down to fewer 100-gig ports. And we are constantly trying to encourage customers to do that to reduce their cross-connect costs. It's kind of neutral to Cogent. It does help in traffic management. And oftentimes, it gives the customer additional headroom for growth. Actually this quarter, we had nearly 6,700 ports that were macked (47:03) or changed that increased their total contract commitment to Cogent by about $65 million. And a lot of that was this consolidation of tens to hundreds.

Okay. Great. Thanks for that color, Dave.

Okay. Great. Thanks, Nick.

Thank you. And our next question comes from the line of Frank Louthan with Raymond James. Your line is now open.

Great. Thank you. Talk to us a little bit about the pricing in the quarter. It was fairly stable. Does anything changing your strategy for getting customers? And if you could comment a little bit on the customer count accelerating, where exactly were you seeing more success in the quarter? Thanks.

Yeah. Sure, Frank. So first of all, on taking the three kind of box of customers, our Corporate on-net ARPUs remain very consistent. Customers do consistently take longer-term contracts that's pulled the ARPUs down slightly. And there has been virtually no change in our price list or the level of discounting for our Corporate on-net customers. We continue to benefit off-net from lower loop prices, which we pass on to our customers, particularly as cable has competed in the off-net footprint with the incumbent telco has provided a good tension, and allowed us to drive loop prices down, still maintaining our margin. Our Corporate growth rates have benefited from more salespeople, better account segmentation and a reversion back to our normal pace of hiring from the surge in hiring we did about a year-and-a-half-ago and, therefore, our rep tenure is increasing. All of those things are I think resulting in our 6.3 units per rep per month and our Corporate on-net penetration rates growing from 14 units per building to 14.5 out of the 51 tenants. On the NetCentric side, it's the combination of these port augments and some of the account segmentation. We've probably done a little less hiring on the NetCentric side than we did on the Corporate side and we're starting to catch up now. So I think that's also a tie-in back to Nick's question of how we would expect that growth rate to accelerate.

Okay. Great. Thank you

Hey. Thanks, Frank.

Thank you. And our next question comes from the line of James Moorman with D. A. Davidson. Your line is now open.

Thanks. Just a follow-up on the earlier NetCentric question. So you said, you expect four of the five to be all clear. As we start moving to – I guess, A, if you could give a little comment on where you're seeing over the top when you kind of think that could to start to have an impact. And then as that does become a factor, are we going to have to have pauses where they have to upgrade the port capacity or should there be enough port capacity to even handle that uptick? And then if you could give a more color on equipment gains, so it sounds like you still expect those maybe to continue as long as you still count (50:32) get legal expenses. Thanks.

Hey, Jim. Two things. So first of all on the port upgrades. We would take many X times the number of port upgrades that we have and we think we could use them. The other side has a much more conservative view of the rate of aggregate industry traffic growth than we've experienced. So we end up negotiating around a target. We install them and then we talk to our existing customers and new customers of where capacity is available quickly filling it up. So it is a stair step. Steps, I think, become further apart because we're trying to build more cushion in. And I think we've demonstrated with the counterparties that our growth rate is closer to what we say it is than what they thought it was. So I hope it smoothes out. I can't say that there is never going to be a situation where one peer won't have some congestion. But I think we're building in enough headroom that there'll be adequate capacity for consumers to continue to download more movies and increase of OTT consumption from the roughly 25 minutes a day per capita today to, hopefully, a couple hundred minutes a day. Now, it'll take a few years. But I think these issues are receding. They're not – it's not a light switch but they are being resolved. With regard to the equipment gains, quite honestly, we were of the opinion we would not be able to get rid of any more of this equipment due to some of its technological limits. But we've actually been able to convince others to take some. So we are encouraged. And we do think we'll sell less than $5 million this year. And that reduction is a bit of a headwind. But with that, we still feel comfortable with our margin expansion target.

Perfect. Thanks.

Hey, thanks, Jim.

Thank you. And our next question comes from the line of Walter Piecyk with BTIG. Your line is now open.

Thanks, Dave. Hey, Dave, did Netflix grow faster than the Corporate average sequentially in this quarter?

So they absolutely grew faster than our Corporate customers. When you say that Corporate average, you mean the average (53:15)

No; I'm sorry: the company, the company average.

Yeah.

Okay. Let's say, what about the NetCentric then? Any way you want to slice it, is Netflix growing faster? Any issues with that customer?

No issues whatsoever. They did grow slightly faster than the average. Much of that growth was outside of the U.S. And remember, the U.S. growth shows up as a pure number; the foreign growth at least on a dollar term shows up on a currency translated basis. So therefore, it's somewhat muted. I think if it was on a constant currency basis, they would've probably increased as a percentage of our revenues.

Any notable new activity from a new, I guess, you would call like a mobile or like an over-the-top service provider?

We have literally hundreds of mobile and fixed line OTT business models. And I wish every single one them success. And want them all to succeed. I just have no real visibility to which ones doing better than others. I will tell you that, it does seem like Facebook's video strategy has picked up a lot of steam and really increased their bit volume consumption more materially than it had been growing.

Got it. And then, historically, when you talked about the cost of your business, and you say, hey I've got these handful of strands and we're only using X percent of the capacity which I think was 30%, 40%, it's very low. And as our business grows, we don't really need – our fiber expenses are not going to go up. So why does your IRU go up to $20 million from $18 million? What is that incremental expense?

So it's two things. One, we added some new route miles in the year. We also bought some replacements, i.e., jettisoned some and replaced some. We talked about that earlier. And then finally, there were a couple of IRUs that we actually extended the term based on the counterparty being interested in longer-term and getting some concessions for that.

But when you extend the term is there some type of upfront payment or is there – I mean, that's a 10% increase. So I assume your route miles didn't increase by 10%. So are you now – when you renewed that term, are they charging you more money for the renewal?

No. The rate didn't go up. We may have paid some discounted amount for that extra term but it would be discounted back. So in other words, we had 15 years left, and they said we want to take this to 25%.

Yeah.

We may have paid them a number but it would have been discounted back. It would be a fairly minimal number. Most of that increase was actually for additional mileage.

Okay. So how much did you increase your mileage in percentage terms or any way you want to express it?

Yeah. I think mileage ended up increasing by about 6% to 7%.

And where are those miles and what is that? Where is that increase happening?

Mostly in Europe. A little bit in the U.S. but much more in Europe?

So you get basically a net – you get like some NetCentric customer that you have to get some more fiber to get to that NetCentric customer because he is in a different location or part of a – a different country or a different part of Europe that you don't have any fiber to?

It's not so much a specific customer as there has been probably a more rapid expansion of the number of data centers, carrier-neutral data centers in Europe than in U.S. And we're 815 carrier-neutral data centers today and, I think, we added about 70 to the network last year. We'll probably add at least that many this year and many of those require new fiber to get to them. In some cases, they are in the same market we're in. In other cases, they can be in a city that's 40 or 50 miles away from where our network is, so we acquire fiber to get to that market.

Okay. And then just last one question. Was Zayo the company you used to extend those route miles?

They are one of the 211 suppliers that we have.

Got you. Okay.

They are a significant one. But...

But I was specifically asking about that particular expansion that occurred. Was that Zayo or was that one of – did you expand with 200 different people? I doubt you expanded with 200 different people?

I think we probably entered new mileage agreements with probably 40 or 50 over the course of this year.

Okay. All right. Cool. Thanks, Dave.

Hey. Thanks, Walt.

Thank you and our next question comes from the line of Michael Rollins with Citi. Your line is now open.

Hi, Dave. Good morning. Just a couple of quick questions if I could. The first one is with regards to the dividend payouts and I think in that press release you've put some commentary in there in terms of recognizing that you do have some covenants. Can you give us some sensitivities and perspectives of how you're looking at the continuity of your return of capital to shareholders? And then secondly, if you could just talk a little bit about how you perceive your positioning in the industry strategically and if any of the evolution of some your competitors changes your perspective of your competitive positioning or strategic aspirations. Thanks.

Yeah. Sure, Mike. So first of all, let's take the capital return. We're very pleased we returned $106 million last year to our equity holders. We expect over the next several years to continue to return more capital. We also care about returning it in an efficient manner. And the fact that our dividend was treated as a return of capital, we viewed as very beneficial to our shareholders. With regard to buybacks, we are committed to doing those. We do have, today, limitations of how much cash is sitting at the holding company level. And we did not want to necessarily accelerate the use of that cash and find ourselves in a situation where cash was trapped at the operating company level, and we couldn't meet our regular dividend commitment. So we're comfortable with our de-levering rate. We feel that we'll get access to that builder basket in 2016. We believe we will return accelerated amounts of capital. You saw our net leverage target was effectively unchanged from 2.98 to 3.02 times, so it's effectively flat. And we would expect to stay within the 2.5 to 3.5 times net leverage range, probably drifting up towards the higher end of the range. So all in all, we expect to return more capital each year than we did the previous year and to do it through both techniques. With regard to industry, I think our position is a great one. We've got a business that sells the right products. We had a network that goes to the right locations. We've got a sales force that's got the lowest cost of revenue acquisition. And most importantly, we're growing faster and generating real free cash flow, that's something that most of the other companies are struggling with. And we're committed to looking at things if they make sense for us to acquire. We're committed to being willing to sell our business if people pay us a premium to our intrinsic value. But we expect we'll be on a call like this a year from now as a stand-alone entity, probably with a purer business model just because that's where we've been.

Thanks very much.

Hey, thanks, Mike.

Thank you. And our next question comes from – is a follow-up from the line of Louie DiPalma with William Blair. Your line is now open.

Good morning, Dave and Tad. Thanks for taking my questions. First for Tad, what was constant currency Corporate growth?

It's virtually identical to the reported number, Louie...

Okay.

...and that's only about 6% of Corporate revenues come out of Canada. So it was a de minimis impact whereas – and there is virtually no European component, whereas on the NetCentric side, 48% of that revenue is international. So for all intents and purposes, 100% of the impact is on the NetCentric business.

And what was the Corporate growth rate then in U.S. dollars?

It was 3.4% sequentially, 15.1% year-over-year.

Great. And over the long-term, do you think that the growth profile is more favorable for NetCentric given your long-term expectations for data center growth and Internet traffic growth?

So we're optimistic about both growth trends. If we look at the 12-year history where we have public data out, the Corporate business has grown at an average of about 15%. The NetCentric business has grown at an average of 10%. I think both will continue at about the same rate. I think there is a lot of runway in both businesses and clearly the NetCentric business because of the greater dependence on on-net has better contribution margins. But net-net, we feel good about both addressable markets.

Thanks a lot.

Hey. Thanks, Louie.

Thank you. And our next question is a follow-up from the line of Colby Synesael with Cowen & Company. Your line is now open.

Hey. Sorry to extend the call, but I just want to go back to a topic that Walt brought up about the suppliers. So you have 211 suppliers of fiber, and obviously you've mentioned that you're more dependent on some than others. But is there any concentration risk where there is one or two suppliers or one or two specific contracts or leases that you have with those suppliers that we need to be more sensitive to in terms of coming up? I mean, if you think about it, a lot of the businesses that your acquired back in the early 2000s had structured some of those agreements around that time period. And if you think about that 15-year to 20-year lease termination or expiration period, one can argue that now and in over the next few years, there could be some of the bigger key routes that you had signed back at that time that could be expiring, and I'm just trying to get a better sense. Is that something we should be more thoughtful to as we go forward the next few years? And is there a chance that we could see some of those routes actually getting rerated perhaps to today's prices versus what would have been paid or structured 15, 20 years ago? Thanks.

Sure. So a few questions in there. First of all, our two largest suppliers were Williams which is now owned by Level 3; and the second, Metropolitan Fiber Network, MFN, which has now – became AboveNet, now part of Zayo. Those original agreements are actually filed publicly. They have been extended and Zayo has been a very acquisitive company, I think, acquiring 37 companies, most of which we had fiber agreements with. We've done a good job and they've been a very cooperative partner in working with us to consolidate those agreements, standardize them and extend them. So we have no significant maturity issues with either of those two vendors or any of our other vendors and feel pretty comfortable on just our ability to mirror their right of way. And in terms of payments, many of our agreements have been upfront payments, some have recurring payments. Most of our agreements do not have a CPI in the actual IRU. I don't think any do actually, and in terms of maintenance we typically cap the CPI on the maintenance portion of IRU. So we just don't see any material risk over the next eight, 10 years to IRU issues at all. And quite honestly, the average remaining maturity, it's still nearly 20 years. So we just don't have an issue in terms of either re-rating or step-up in prices.

Great. That's super helpful. Thank you.

Thank you. And I'm showing no further questions at this time. I would like to turn the conference back over to Mr. Dave Schaeffer for any closing comments.

Hey. Well, thanks a lot, everyone. We did manage to get it to just over an hour which I think is quite an accomplishment. And we appreciate all the great questions, all the great support, and we think we're on the path to continue revenue expansion and growth rates that will return to our historic norms. Take care, everyone. Thanks.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a great day.