The government has looked for a third party/ Maybe manage that business, take over that business and has been unsuccessful. And as a result of that and our focus and continuous work as an industry to make sure that there is no customer disruption as those subscribers were looking for a new Home, the process has been managed, I think, quite well. And as a result of that, although the law in Panama still says three players, the de facto reality is that it’s a two-player market with everyone having done it’s best to find a very healthy industry structure going forward. Because of these, Marcelo, this is not the result of organic M&A. This is the result of an industry adjustment that was necessary and an inorganic transition which was well-managed vis-a-vis the customer.
As a result of that, is a de facto to play a market. And as a result of that, we’re not expecting any remedies coming out of Panama. Colombia. It is a matter of public record that WOM filed for a chapter 11 type proceeding not too long ago. The first thought that comes to mind is a book by a Colombian Nobel prize winner, [indiscernible], apologies for the use of Spanish language, you can all look that one up, Chronicle of a Death foretold, we always imagined that it was difficult for the Colombian industry structure to accept a new player. Having said that, it has been very painful four or five years for the industry. Crisis came down. We all had to react. Our push in Colombia came under a lot of pressure. But you see that we held our own in Colombia.
I spoke of that at length. And as a result of that, that process, the chapter 11 type bankruptcy of WOM in Colombia is at the very beginning of that process. And it will be the beginning of what I believe to be an inflection point in Colombia, meaning, the industry structure in Colombia, as I’ve been vocal, is too damaging to those do not have the will to stand it for long term. And here’s one more example of that. So I believe we’re at an inflection point and at some reconstruction, the Colombia industry structure which needs to be reconstructed. So that long term, healthy players can continue to invest. Things like the combination of our network with Telefonica was badly needed. The filing of bankruptcy proceedings whereby WOM was expected because the industry needs recomposition and this may be on the positive side, an inflection point.
That’s what I expect will happen going forward and that we have expected would having gone through very painful last four to five years. Having said that, Marcelo, two comments. One, we’re only at the very beginning of that, right and bankruptcy proceedings do afford the parties that undergo it some financial protection which means they remain commercially active. And because they remain commercially active, they’re still a player in the market. So don’t expect any short-term upside from that. And bankruptcy proceedings are by definition uncertain and they are at the very beginning. So as much as I see a long-term trend towards a better industry structure in Colombia, I caution you on the short because there’s uncertainty on the outcome and it is the early days.
Marcelo Santos: Perfect. Thank you very much.
Michel Morin: Thank you, Marcelo. So next we’re going to go to Oscar Ronnkvist at ABG. Oscar. You’re on mute. Oscar.
Oscar Ronnkvist: So sorry for that. Thank you, Michel. Yes, so my first question, just a detail, one, on the severance pace .I think you said about $30 million in severance in H1, and you had $30 million now in Q1. So was that, I mean, obviously we were to expect maybe some more restructuring costs but just on the severance that you alluded to in the Q4 report. Is that all already taken now in Q1 or is there still some that we should expect in Q2? Then my second question would just be, you talked a little bit about Colombia and the network JV with Telefonica and you said that you are on track to reach profit or more than break-even in free cash flow in Colombia during 2024. So just in terms of timing, obviously there are some positives and some negatives short term but when do we see a positive run rate on a net effect, cash flow-wise, in the network JV in Colombia?
And just the third, I was just curious to hear your thoughts about, I mean, now that you have accelerated the savings program, it was quite a steep headcount reduction that you have seen and also, I mean, cost optimization across the board. So my question would be, do you have any sort of insights to share with us how the remaining staff has handled all of the cost reductions and we see any sort of impact on the satisfaction from the personnel? Thanks.
Mauricio Ramos: Well, that’s a good one, the last one. So I’ll take a couple of those and then maybe give you parts and time to prepare it on the actual map on the severance. So listen, the JV with Telefonica has been years in the making and it has required not only important negotiations with the governments to have it approved but also important negotiations with our partner. It is already yielding benefits, as I said on the call because we were able to buy 5G spectrum together and we’ll be deploying, we are deploying that network together. The actual coming together of the JV is happening as we speak but it is an important element along with all the other elements that yield positive cash flow targets for Colombia for this year, as a full year.
On the headcount reduction element and the impact it has had on the team, I want to take the opportunity to thank everyone. There’s about possibly 300 or 400 people from TIGO listening to this call, Oscar. So your question is actually very welcome. We could have not undergone this, important as it is valuable to shareholders as it is, we could have not done it as fast, as deep without A, the support, the challenge from Atlas but B, also that immense Sangre TIGO that we have built in this company. We have done it because the teams believe in what we’re doing, believe in the purpose of what we’re doing, want to see the company succeed. And as a result of that, they understand that harsh and difficult as this was, it was important and better to do it fast and quick and move on going forward which is only the result of years of building that tremendous culture that now we’re putting to use.
There was a politician that once said, what is the point of having capital if you don’t put it to use? That’s what we have done. And that is thanks to all the people that have for so many years, built this amazing company and this Sangre TIGO. On to numbers, severance.
Bart Vanhaeren: Yes. Now on severance, I think last year or in the quarter, we said that we would expect $30 million to $35 million of severance payments in the first half of this year. A very significant portion has been executed now in Q1, definitely as planned. But as I mentioned before, we continue to look for optimizations across the Board not only on headcount but on other costs, suppliers, CapEx name it. So that–so there will be more. We started to report now on– as reported, not adjusted. I don’t think the same intensity as this quarter but as there are maybe less severance, there might be some other restructuring during charges. Definitely less but probably some more to come.
Oscar Ronnkvist: Okay, thank you.
Mauricio Ramos: And I think on the JV or the equity free cash flow in Colombia. The performance in Colombia is doing very well, right. So we have more than 24% EBITDA growth compared to last year. So that gives a lot of oxygen. Net off restructuring costs, our EBITDA in Colombia is north of 40%. This is not the first time that we reach those levels in Colombia and that obviously flows down into a much more air in the equity free cash flow. So we have increased revenue, improved margins, lower costs will have less spectrum in the year to go. And we have CapEx savings. We’re focusing more on our Mobile growth which has immediate returns as opposed to the growth in the Home business. So, also cash flow-wise and EFCF-wise, that gives a lot more flexibility in your equity free cash flow.
And then additionally, from the JV with Telefonica, I don’t expect a net EFCF saving immediately this year, more of a breakeven on that level. And then the benefits to come in mostly next year. It’s split in two sides, one on spectrum and that derives, obviously, some of that is already in the bank as we start to look at 5G, etcetera together from the JV rather than separately. And then as well in CapEx going forward where you will have a single network to manage from the JV as opposed to each company’s their own. Headcounts. Nailed it.
Oscar Ronnkvist: Thank you very much.
Michel Morin: Okay, thank you. So we’re about one minute to the top of the hour here. We do have a last question from Eduardo Rubi at UBS. Eduardo will make it a quick one.
Eduardo Rubi: Hi, guys. Thanks for taking my question. Just a quick one here on my side. So I would like to know how you’re seeing the leverage going forward as we already delivered some improvements this quarter. Thank you very much.
