What’s wrong with WOM? Now Colombia unit files for bankruptcy protection 

What’s wrong with WOM? Now Colombia unit files for bankruptcy protection 

A matter of weeks after operator WOM Chile filed for Chapter 11 bankruptcy protection in the US, the Colombian unit seems to be having difficulties of its own.

The BNamericas news service reports that this week the Colombian unit of WOM has followed in the footsteps of its counterpart in Chile and filed for bankruptcy protection – this time with the local companies regulator – to pay its debts.

The reason this became necessary appears to involve complying with commitments made to the government and suppliers. However, it’s notable that the company suggested late in 2023 it had "guaranteed" financing sources for this and future years.

A press release quoting Ramiro Lafarga, the company’s CEO in Colombia, say that the company’s main shareholder, together with Deutsche Bank, were looking at ways to achieve the required financing and ensure its sustainability. Lafarga also insisted that this was a business for the future.

At the same time, however, the company pointed to the challenges of a highly competitive, capital-intensive sector with declining ARPU.

As with WOM Chile, the suggestion is that bankruptcy protection is the route that will guarantee the continuity of the operation. Indeed, the company has stressed that it will continue to operate normally during this restructuring process so that the more 6.4 million users who depend on its services will not be affected.

However, local news service El Colombiano quotes legal expert Billy Escobar from the Superintendent's Office, which oversees commercial companies, who says that the company needs an injection of close to 40 billion pesos (about US$10.3 milllion) to save its operations and continue to meet its demand.

There are also the related questions of how, among other issues, it will meet the coverage obligations of the 5G tender, deal with its reported losses in 2021 and 2022 (2023 figures don’t seem to be available) and, as Lafarga told BNamericas in January, invest “hundreds of millions of dollars” in the coming years in Colombia.

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