Walter Piecyk: Can I assume that if you’re financing a phone to a prepaid customer that if that customer is not going to recharge their phone each month that you’ll require full payment of the phone? Or can they continue to have make their finance their lease payments or their finance payments on their phone and not recharge on the prepaid because obviously, that would be something that could help your churn rate and the prepaid side of things as well?
Daniel Hajj: We’re starting to finance is not a big operation, but what we’re seeing is that we have, we can lock the phone, if they don’t pay, then we can lock the phone that they cannot use the phone. So people are starting to pay again. So it’s been the bad debt is not it’s lower than what we’re thinking. And we’re going to do that smoothly as lonely to see that it’s a good business for us, means good businesses grew the new subscribers more, they charge more. And we have profit selling these concepts. So those are the three things that we’re selling, that we’re seeing.
Walter Piecyk: And if you don’t mind…
Daniel Hajj: In postpaid as I said in postpaid, we have been financing for five, seven years. So we have been doing that for a long time. And it’s been very good.
Walter Piecyk: If you don’t mind. The other question was just on target leverage, because I noticed that your share repurchase was a bit lower in the first quarter. Have you changed your kind of view on target leverage given the kind of rate environment that exists?
Carlos Moreno: We have probably about $100 million equivalent to share buybacks in the first quarter typically, as we have said in other calls, our cash flow is very seasonal. And that’s partly why we have less buybacks in this quarter always. I think another thing that we are taking into consideration, I think it has to do a little bit with CapEx.
Daniel Hajj: Yes. What we’re seeing is that we have like a target of a billion, a little bit more or less for the next three years in CapEx. And we’re seeing that if we put a little bit more fiber that brings more connectivity to houses to businesses, long enterprises, data centres, and give more fiber for 5G, it’s been good is a good opportunity. And we’re thinking to increase a little bit our CapEx this year to bring forward some of the CapEx, it’s a good opportunity in some countries to do that for around maybe 4% to 5%, more than what we had this year. And we’re looking that it will bring us good subscribers, better ARPUs, more penetration in broadband, in corporate, in a lot of things. So that’s why we’re reviewing and seeing to do in some countries, the world.
Walter Piecyk: Thank you.
Operator: Our next question comes from Leonardo Olmos from UBS. Your line is open.
Leonardo Olmos: Hi, good morning, everyone. Thank you for taking the question. So I got a couple of ones. The first one is, can you please discuss the telecom separation that has been requested by your competitors? And if there’s a risk of IFT doing something about it, or maybe directly dam or government? That’s the first one. Thank you.
Daniel Hajj: Well, what you have been seeing this a lot of noise from the competitors in the press. But our position is that we do believe that there is a substantial evidence supporting the needs of our deregulation in the telecom sector. I think the upcoming revision process with the IFP will bring a good opportunity for relaxing the regulation in Mexico. The only thing that I want to add is let’s wait for August to see what are going to be the comments of the IFT and see what is happening both in our — the point is that Mexico needs deregulation in the telecom sector. More investment, less regulation is what all the countries and all the world wants.
Leonardo Olmos: Crystal clear. Thank you. And the second one, we notice some cost pressures to relevant in a few countries, especially Colombia and Mexico that has higher OpEx than we estimate here in UBS. Can you discuss what happened and your expectations for the remaining 2023? Thank you.
Daniel Hajj: For your note, and saying the EBITDA margins in Mexico came down by 100 basis points, when you compare it to total revenue and that has to do with equipment sales, and we are starting to evaluation equation growing nearly twice as fast service revenues from mobile. So we do have — if you look at the EBITDA margin relative to service revenue, there’s a slight reduction, but it’s something like 30 basis points, or 40 basis and not the 100 basis points that we mentioned, and this reduction is practically all having to do with a new legal framework. We are now obliged to consider things by case you want to go other things we need to account for that earlier. So there’s a little bit of a different of that in the first quarter.
So all that which is basically not a change in the cost, or the year. But yes, change in the way can we account for it throughout the year. That’s the only thing that we have that we can say what it is to do in Mexico. In the other countries, we don’t really have anything to do. Maybe in some cases, mostly provisions. It’s really not something that we are seeing in customs. Some of the pressures eating of margins, certainly not the case in Colombia.
Carlos Moreno: A little bit in Colombia, what’s happening a little bit, I think there’s more pressure, a lot of competition. And we’re starting to grow again in the broadband. So I think that’s more or less what is happening. The exchange rate goes a little bit high. So some cost related to peso dollar, Colombian peso to dollar. But overall, I think Colombia is also doing good. We still we have a very good margin in Colombia. And we’re going to compete in Colombia, and we’re going to take opportunity of the market. So that’s what we’re going to do.
Leonardo Olmos: Understood, thank you very much. Carlos and Daniel. Have a good day.
Operator: Our next question comes from from JPMorgan. Your line is open.
Unidentified Analyst: Hello, guys. Can you hear me?
Daniel Hajj: Yes.
Unidentified Analyst: Perfect. Thank you for taking my question. So what is the timing and the goal to surpass 80% FTTH penetration in Mexico? And the second question in Brazil, we have seen that you’ve been accelerating efforts FTTH in Brazil, is there any mindset regarding fiber overlay? Thank you.
