Infrastructure investor I Squared Capital has agreed to acquire data center assets from Cogent Communications for $225 million, according to a Reuters report dated May 25, 2026. The purchase anchors a new data center platform — reported at roughly $1 billion — that I Squared is positioning around artificial-intelligence inference, the day-to-day serving of AI models to users rather than the training of them.

Executive Summary

The transaction pairs a specific asset purchase with a bigger strategic wager. I Squared, a private-equity firm that specializes in infrastructure — roads, energy, and increasingly digital assets — is paying $225 million for facilities Cogent had been carrying on its books, and is using them as the foundation of a platform sized in press coverage at around $1 billion. The stated thesis is AI inference: the compute that answers queries, generates content, and runs AI features inside applications, which tends to sit closer to end users than the massive training campuses built by hyperscale cloud providers.

For Cogent, a company best known as a low-cost internet backbone and transit provider, the sale converts long-marketed real estate into cash. For the broader market, it is a data point that institutional capital now sees a distinct, investable asset class in smaller, distributed colocation sites — not just in the gigawatt-scale campuses that have dominated AI headlines. Whether inference demand materializes at these locations on the timeline investors hope is the open question the deal leaves unanswered.

Inference Is a Different Business Than Training

Most AI data center investment to date has chased training: enormous, power-hungry campuses where models are built, often in remote locations chosen for cheap land and available electricity. Inference — running the finished model every time a user asks a question — has a different profile. It is latency-sensitive, scales with user traffic rather than with model size, and in many architectures benefits from being distributed across metros closer to population centers. That is the logic behind putting inference capacity into smaller, geographically scattered facilities of the kind changing hands here.

The economics are also different. Training clusters are typically leased wholesale by a handful of very large tenants; inference capacity can, in principle, be sold in smaller increments to a broader customer base, which looks more like traditional retail colocation — renting secure, powered space to many customers. If that market develops, operators of distributed sites gain pricing power they have not had in years. If inference instead consolidates inside the hyperscalers’ own clouds, the thesis weakens. The release, as reported, does not settle which way demand is actually breaking.

A Payday for Cogent’s Conversion Thesis

Cogent acquired Sprint’s legacy wireline business from T-Mobile in 2023, a deal that brought with it a large portfolio of former telephone switching facilities across the United States. Management has spent the years since arguing that these buildings — hardened structures with existing power feeds and fiber connectivity — could be converted into sellable or leasable data centers. Skeptics noted that carrier hotels built for 1990s telecom gear are not automatically suited to modern high-density computing, and that monetization was slow to show up in reported results.

A $225 million sale to a sophisticated infrastructure buyer is the most concrete external validation of that thesis to date, though one transaction does not price the whole portfolio. It is worth being precise about what the deal does and does not prove: it shows a willing buyer at a real price for some assets, but the report does not disclose how many facilities are included, their capacity, or their condition — so extrapolating a value for Cogent’s remaining sites from this headline number would be premature.

Private Capital Moves Down-Market

I Squared’s entry continues a pattern of infrastructure funds treating digital assets — fiber, towers, and data centers — as core holdings alongside energy and transport. What is notable is the segment: rather than bidding on trophy hyperscale campuses, where competition from sovereign wealth funds and mega-funds has compressed returns, this platform targets the fragmented middle of the market. A reported $1 billion platform commitment suggests the firm intends to aggregate and upgrade additional sites, not simply hold what it bought.

The risks are equally clear. Retrofitting older facilities for AI-grade power density and cooling is capital-intensive, utility interconnection queues are long in many metros, and the platform will be competing for tenants against established colocation providers with existing sales channels and ecosystems. The strategy’s success likely depends less on the entry price than on execution: securing power upgrades, landing anchor customers, and timing capacity to a demand curve that remains genuinely uncertain.

Background

Cogent Communications built its business as an aggressive price competitor in internet transit, operating a global fiber backbone. Its 2023 acquisition of Sprint’s wireline business from T-Mobile brought hundreds of former telephone switching sites, and management has since pitched their conversion into data centers as a major source of untapped value — a claim the market has watched for proof in the form of actual sales or leases.

I Squared Capital is part of a wave of infrastructure private equity that has moved decisively into digital assets over the past decade, on the view that data centers, fiber, and towers offer the long-lived, contracted cash flows these funds seek. The AI boom has intensified that interest, first in massive training campuses and now, as this deal suggests, in the distributed facilities that may serve AI inference closer to end users.

Source: I Squared bets on AI inference with $225 million data center buy from Cogent (Reuters) — report on I Squared Capital’s acquisition of Cogent data center assets and launch of an AI-inference-focused platform, May 25, 2026.