Ethics and compliance

Corporate governance

In June 2020, the CNMV (National Stock Market Commission, in its acronym in Spanish) published a revision of the "Good Governance Code of listed companies”. As stated in the document, in recent years, there have been a raft of initiatives concerning good practice in corporate governance matters. These have increased considerably since the start of the global financial crisis, reflecting a widespread conviction of the importance of listed companies being run in a proper and transparent manner, as a key driver of value generation in the corporate sector, improved economic efficiency and the strengthening of investor trust.

Therefore, the main objective of the "Good Governance Code of listed companies” is to ensure the proper functioning of the governing and administrative bodies of Spanish companies to maximise competitiveness, build trust and transparency for shareholders and domestic and foreign investors, improve internal control and corporate responsibility systems, and ensure the correct internal distribution of functions, duties and responsibilities under standards of maximum rigour and professionalism.

The 2020 Good Governance Code has a number of new elements:

• The Good Governance Code uses a new format based on selecting and identifying the principles informing each set of specific recommendations.
• A significant number of the 2006 Code’s recommendations have since been written into legislation (in cases such as the powers exclusive to the general meeting or the board of directors, separate votes on general meeting items, vote splitting, etc.), and therefore do not form part of the 2020 Good Governance Code.
• A new set of recommendations deals specifically with what is known as Environmental, Social and Governance (ESG), which is increasingly acknowledged, both in Spain and its neighbours, as a key issue which must be addressed by companies’ corporate governance systems, and which therefore has a justified place in any code of good corporate governance recommendations.

In line with the recommendations of the CNMV, Cellnex’s corporate documents are being revised to incorporate the best Corporate Governance practices recommended in the new CNMV Good Governance Code of listed companies, inter alia. In this regard, the objective of having a 40% female representation of directors on the Board of Directors by the end of 2022 and thereafter will be included in the Director Selection Policy and in the Board of Directors Regulations.

On the other hand, the Appointments and Remuneration Committee (ARC) of the Board of Directors has been renamed as the Nominations, Remunerations and Sustainability Committee (NRSC), being the highest governing body responsible for ensuring compliance with the commitments established in the ESG Policy, as well as the actions which may derive from it.

Moreover, in 2020 an external consultant performed an evaluation of the functioning of the Board and its Committees. The results show that there is an overall good composition of the Board of Directors; there is a good information flow and there has been a very high capacity and flexibility to adapt and respond to the needs in the exceptional COVID-19 circumstances. Additionally, dedication of the Board members is very high and there is a very good monitoring of the relationship with shareholders. However, some improvements were identified for the coming years and these will be included in the action plan to be implemented.

The composition of the Board of Directors follows the Policy for the Selection and Appointment of Board Members. In accordance with article 529 decies of the Spanish Companies Law, the policy states that when it comes to proposing the appointment or reappointment of members of the Board of Directors, the Nominations and Remunerations Committee shall be responsible in the case of independent board members, while the Board of Directors itself shall be responsible in all other cases.

In accordance with article 529 (i) of the Spanish Companies Law, the referred policy establishes that the selection of Board member candidates shall be based on a prior analysis of the needs of the Company, performed by the Board of Directors with advice and a report from the Nominations and Remunerations Committee. As the aim is to integrate different professional and management experiences and skills and to promote the diversity of knowledge, experience, age, and gender, while bearing in mind the weight of the different activities undertaken by Cellnex and considering specific areas or sectors that need to be strengthened.

Therefore, candidates for the position of Board Member of the Company must be honourable and ideal persons of recognised solvency, with the competence, experience, qualifications, training, availability and commitment required for the position. They must be trustworthy professionals whose conduct and professional career are aligned with the principles set out in the Cellnex Code of Ethics and with the mission, vision and values of the Cellnex group.

The overall composition of the Board was maintained during FY 2020, although there were changes in some positions. The current composition of the Board ensures a compact, experienced and strategy-oriented Board of Directors comprising three proprietary directors and seven Independent directors, in addition to the Chief Executive Officer. Two vacancies that have remained unfulfilled at the date of this report.

Changes in 2020

Changes in the Shareholder structure

Changes in the shareholding structure have taken place since the previous year's General Shareholder’s Meeting, the most significant being the dissolution of ConnecT, the vehicle that controlled 29.9% of the share capital of Cellnex until June 2020. Since then, each of the three shareholders of ConnecT (Edizione, ADIA and GIC) have controlled their shares in the Company: Edizione now has 13.025%, GIC controls 7.031% and ADIA 6.97%.

Therefore, since June 2020, the significant shareholders in Cellnex Telecom are:

Changes in the Board of Directors

The most significant changes made to the Group's Board of Directors in 2020 are as follows:

• Mr. Carlo Bertazzo, proprietary director representing ConnecT, resigned on 28 February 2020.
• On 2 April 2020 Mr. Christian Coco was appointed as proprietary director of ConnecT following the resignation of Mr. Carlo Bertazzo.
• Ms. Elisabetta de Bernardi, proprietary director of ConnecT, resigned on 10 June after the dissolution of ConnecT.
• The General Shareholders Meeting held on 21 July 2020 ratified Mr. Franco Bernabè, Mr. Mamoun Jamai and Mr. Christian Coco and re-elected Ms. Marieta del Rivero Bermejo.
• Mr. Mamoun Jamai, proprietary Director of ADIA, resigned with effect from 24 August.
• On 16 December 2020, Ms. Alexandra Reich was appointed as proprietary director of GIC, following the resignation of Ms. Elisabetta de Bernardi.

In 2021 there were significant changes to the Board of Directors as follows:

• Mr. Franco Bernabè, proprietary director of Edizione, resigned on 4 January 2021.
• Mr. Bertrand Kan was appointed Chairman of the Board of Directors on 22 January 2021.

The Cellnex Board of Directors

The Board of Directors met 12 times in 2020 (17 times in 2019), achieving an attendance rate of 100% (95% in 2019). The Board of Directors held most of its meetings by videoconference, as a consequence of the COVID-19 outbreak, with no impact on its functioning. There were also 8 ACC meetings (10 in 2019) and 12 NRC meetings (8 in 2019)”.

The new CNMV Good Governance Code was published in June 2020. Cellnex is currently reviewing its corporate documents and processes to incorporate the amendments introduced by the new Good Governance Code, among other things.

Notwithstanding, during 2020 Cellnex complied with 61 out of the 64 recommendations. For the remaining three recommendations, one is to be highlighted:

• Recommendation 64: CEO compensation may not exceed two years' total compensation:
  • CEO compensation is for two years.
  • In addition to this, there is compensation equivalent to one year through the "post-contractual" non-competition agreement.

The Board of Directors has seven independent directors (representing 64% of the current total), two proprietary directors, and one executive director. There are currently two vacancies on the Board. The Cellnex Audit and Control Committee (ACC) comprises four directors, three of whom are independent, and one is a proprietary director. In the Nominations and Remunerations Committee (NRC), there are five directors, four of whom are independent, and one is a proprietary director.

Independent directors:

• Bertrand-Boudewijn Kan. He has extensive professional experience in investment banking and focused on the telecoms, media and technology sector in particular. He spent most of his career at Morgan Stanley where he became a Managing Director and Head of the European Telecoms Group. Subsequently in 2006 he moved to Lehman Brothers, where he was Co-Head of the Global Telecoms Team and was a member of the European Operating Committee. In 2008, he became Head of the Global Telecoms, Media and Technology Group at Nomura and was a member of Nomura and served on the Investment Banking Global Executive Committee. He left investment banking in 2012. Among other responsibilities, in addition to the Cellnex Board, he is currently a member of the Advisory Council of Wadhwani Asset Management, Chairman of Sentient Blue and Chairman of the Board of UWC Netherlands. Bertrand Kan graduated with B.Sc. and an M.S.c degrees in Economics from the London School of Economics.
• Pierre Blayau. He is currently holding the position of president of CCR (Caisse Centrale de Reassurance), member of the strategic committee of SECP (Canal+ Group), Censor of FIMALAC, Senior Advisor of Bain & Company and Chairman of Harbour Conseils. He was previously Chief Executive Officer of Pont à Mousson, PPR, Moulinex, Geodis, and Executive Director of SNCF. He has also served as Executive Director of La Redoute, as a member of the Board of Directors of FNAC, and Independent Director of Crédit Lyonnais and President of the Board of Directors of Areva. Pierre Blayau is a Public Finance Inspector of the French Ministry of Finance, and graduated from the École Nationale d’Administration de Paris and the École Normale Supérieure de Saint-Cloud.
• Giampaolo Zambeletti. He has spent much of his professional career in the chemicals/pharmaceuticals and telecoms sectors. Currently holds the position Vice-President of Unidad Editorial, S.A. He was previously Founder and Managing Director of Zambeletti España, President and CEO of Zambeletti Group, President of Italgas SpA, President and Managing Director of Ellem Industria Farmaceutica SpA . He served as Vice President of the pharma labs association, Farmindustria. In 2001 he has been appointed Group Senior Vice President International Affairs of Telecom Italia. He has furthermore been a member of the Board of Directors of Telecom Italia International (Netherlands), Auna, S.A. (Spain), Avea (Turkey), Oger Telecom (Dubai), Ojer Telekomunikasyon (Turkey) and Telekom Austria. Giampaolo Zambeletti holds a degree in Chemistry from the Università degli Studi di Pavia, is an international trustee of the Friends of the Prado Museum Foundation in Madrid, and received the Isabel la Católica Award from King Felipe VI in 2015.
• Peter Shore. He has extensive experience in the telecommunications and tech sector. He held the position of Chairman of Arqiva in the UK from 2007-2014. He has also been Chairman of Uecomm, Lonely Planet Publications, the Hostworks Group and Airwave. Shore was Group Managing Director at Telstra in Australia, CEO of MyPrice (Aust/NZ) and Managing Director of Media/Communications/Partners. He has served as a Director of Objectif Telecomunications Limited, Foxtel, SMS Management and Technology and OnAustralia. He was furthermore a member of the Advisory Board of Siemens Australia. He also served as member of the Corporate Board of the National Society for the Prevention of Cruelty to Children and Board of the Australia-United Kingdom Chamber of Commerce. He is also currently Chairman of Gigacomm Pty Ltd, a private Australian broadband service provider. Leonard Peter Shore holds a degree in Applied Mathematics and Computing Science from the University of Adelaide.
• Marieta del Rivero She is independent director of Cellnex Telecom and Gestamp Automoción. Non-executive Chairperson of Onivia. She is a member of the Advisory Board of the Mutual Society of Lawyers and of the “Made in Möbile”. She has been global marketing director of Telefonica, deputy managing director to the digital commercial managing director of Telefónica, CEO of Nokia Iberia, senior advisor of Ericsson, partner of Seeliger & Conde and Chairperson of International Women´s Forum Spain. She was one of ‘The 500 Most Influential Women in Spain’ in 2018, 2019 and 2020 according to ‘El Mundo’; she was one of ‘The Top 100 Women Leaders 2018’ by Mujeres & Cía, and she was recognized as the ‘Best Executive 2017’ by the Spanish Association of Business Women. She is the author of the book ‘Smart Cities: a vision for the citizen’. Marieta del Rivero is a member of the management board of the Spanish Directors Association (AED), AMP by IESE, EP by Singularity University and executive coach certified by ECC. In 2019, she attended the ‘Workshop in Global Leadership’ provided by the Harvard Kennedy School. Marieta del Rivero is BA in Business Administration by University Autónoma of Madrid (UAM).
• Anne Bouverot. She is currently Chairperson of the Board of Technicolor, as well as Senior Advisor of TowerBrook Capital Partners and Board Director at Capgemini and Edenred. She is also Chairperson of Foundation Abeona, whose motto is “Data Science for Fairness and Equality”, working on social impact of AI and digital technology. Previously she was CEO of Morpho, a biometrics and cybersecurity company (between 2015 and 2017) and general director of the GSMA (between 2011 and 2015). She also held several international management positions in companies in the telecommunications sector such as France Telecom / Orange (Executive Vice President of Mobile Services from 2009 to 2011), Global One Communications, Equant and Telmex. Anne Bouverot has a degree in Mathematics and a PhD in Artificial Intelligence from the École Normale Supérieure in Paris, and a degree in Engineering from Telecom Paris.
• María Luisa Guijarro. She has worked most of her career in the Telefónica group, from 1996 until 2016, where she held positions including Global Marketing and Sponsorship Manager, CEO of Terra España, Director of Marketing and Business Development in Spain and, in her later years at the company, member of the Executive Committee in Spain as head of Strategy and Quality. She is proprietary director on behalf of EQT in Adamo Telecom Iberia, S.A. and Adamo Telecom, S.L. She has a degree in Economics from the Universidad Autónoma de Madrid.

Proprietary directors:

• Franco Bernabè. He is senior advisor to Barclays Bank. He contributed to the creation of Nexi S.p.A. Prior to this, he was Chairman and CEO of Telecom Italia, , he led as CEO the restructuring and the listing in the NYSE of ENI, the Italian state oil company, Vice-Chairman of Rothschild Europe, member of the board and Chairman of the Audit Committee of PetroChina for 14 years, member of the Supervisory Board of TPG Post Group in the Netherlands, member of the International Council of JP Morgan. He was also member of the Executive Committee of Confindustria and a member of the European Roundtable of Industrialists. He served pro bono in the leading Italian cultural institutions as Chairman of La Biennale di Venezia, MART, Quadriennale di Roma and the Italian National Commission for UNESCO. In 2011 he was knighted by the President of the Italian Republic.
• Christian Coco. He is Investment Director at Edizione Srl. He is also a director of the companies of Edizione Group, Benetton Srl and CEO of ConnecT Due, as well as non-executive Chairman of Benetton Group Srl. He began his professional career in strategic planning in the energy sector and in 2002 he joined Mediobanca in the acquisition finance department. From 2007 to 2011 he worked in private equity firms, focusing especially on investments in the infrastructure sector in Europe. Subsequently, and until joining the Edizione Group in 2015, he was head of Planning, Control and M&A of the CIR Group of the De Benedetti family. Christian Coco has an engineering degree from Milan Polytechnic, and a post graduate degree in Utility Companies from MIP Milan (Politecnico’s Business School).
• Alexandra Reich. She has 20 years’ experience in the telecommunications industry, after starting her career in investment banking. She is currently member of the Board of Directors of the Dutch company Delta Fiber. She has been senior advisor at Telenor, as well as CEO of Telenor in Thailand – DTAC (from 2018 to 2020) and CEO of Telenor Hungary (from 2016 to 2018) as well as Chairperson of the Boards of Telenor Serbia and Telenor Bulgaria. She also held various management positions at Swisscom (between 2009 and 2016) and Sunrise (between 2007 and 2009) in Switzerland, and at Hutchison (between 2005 and 2007) and United Telecommunications (between 2004 and 2005) in her native Austria. Alexandra Reich has a degree in Business Administration and a Master degree from the Vienna University of Economics and Business Administration.

Executive Director:

Tobías Martínez. He is the company’s top-ranking executive (CEO). He joined Acesa Telecom (Abertis Group) in the year 2000, first as Board Member and Director General of Tradia, and subsequently of Retevisión. Before joining the Abertis Group, he headed his own business project in Information and Telecommunication Systems for more than 10 years. He studied Telecommunications Engineering and holds a Diploma in Top Management from the IESE Business School (PADE) and a Diploma in Marketing Management from the Instituto Superior de Marketing de Barcelona (Higher Institute of Marketing of Barcelona).

Secretary non-member of the Board:

• Jaime Velázquez. He has a Law degree from the University of Extremadura and is a State Lawyer on leave from that post. He has extensive experience in Commercial Law, mainly in corporate merger and acquisition operations in regulated sectors and in matters related to corporate governance of companies. He is currently running an international law firm in Spain, which he joined in 2005. Previously, he served as secretary of the board of directors and director of legal advice of the Spanish Official Credit Institute (ICO), and general secretary of the council of the Telecommunications Market Commission (CMT). He has taken part in numerous talks and has also been an associate professor of Commercial Law at the Pompeu Fabra University in Barcelona.

Vice Secretary non-member of the Board:

• Virginia Navarro. She is Director of Legal M&A & Financing at Cellnex. Prior to that, she was Senior Manager of the Legal Department at Abertis Infraestructuras, where she spent ten years actively participating in the Group’s M&A and financing projects, both national and cross-border. Previously, she worked at Linklaters in Spain as Associate in the Corporate Department, and in the legal department of Morgan Stanley. Virginia Navarro has a Law degree from Pompeu Fabra University (UPF) and a Master in International Legal Practice from Instituto de Empresa (IE).

Committees of the Board of Directors

The Cellnex governance bodies are supplemented by the Audit and Control Committee (ACC) and the Nominations and Remunerations Committee (NRC), both composing non-executive Directors, mostly independent Directors. It is also important to note that independent Directors chair the Board Committees. The responsibilities and functioning of the ACC and the NRC are set out in the Board of Directors Regulations.

In the past few months there were some changes on the Committees of the Board of Directors. In this regard, the Appointments and Remuneration Committee (ARC) of the Board of Directors has been renamed as the Nominations, Remunerations and Sustainability Committee (NRSC) and the Audit and Control Committee has been renamed the Audit and Risk Management Committee.

Ethics and compliance

All activities performed by the Cellnex group are based on a solid culture of compliance, ethics and integrity to which the Management and the Board of Directors of Cellnex Telecom are firmly committed.

With the aim of continuously improving its performance in the field of compliance, Cellnex group has put in place a series of bodies, policies and control mechanisms in the area of compliance, among which we would highlight:

• The establishment of the Committee of Ethics and Compliance, which is also the Body Responsible for criminal fulfilment of the Cellnex group.
• The adoption of compliance policies, such as the Code of Ethics and the Prevention of Corruption Procedure.
• The establishment of control mechanisms of the compliance model, such as the Ethical Channel and the Disciplinary System.

The Committee of Ethics and Compliance of the Cellnex group is the body in charge of guaranteeing the Group’s compliance with legal requirements, and its function is to ensure the respect for business ethics and integrity, as well as compliance with the imperative and voluntary regulations that apply to the Group, with the Code of Ethics at the centre. Thus, it is the advisory and management body, as well as executive, for all issues related to the Code of Ethics of the Cellnex group.

The current composition of the Committee of Ethics and Compliance is as follows:

• José Mª Miralles (Chairman). General Counsel Legal & Regulatory Affairs
• Sergi Martínez (Secretary). Internal Audit & Risks Control
• Alberto López. Global Resources Director
• Toni Brunet. Corporate & Public Affairs Director

In order to preserve the independence of the Committee of Ethics and Compliance of the Cellnex group, this body maintains its functional and organic dependence from the Committee of Appointments and Remunerations of the Board of Directors of Cellnex Telecom.

The Committee of Ethics and Compliance, as the Body Responsible for criminal fulfilment of the Cellnex group, is the body in charge of identifying risks, mainly specific criminal risks of the Cellnex group, and establishing controls and measures to mitigate them through the dynamic management of the system of Prevention and Detection of Crimes.

In 2020, Cellnex, assisted by PwC, reviewed and updated its Crime Prevention and Detection Model to adapt it to the recent legislative amendments as well as to Cellnex’s organisational changes. This task began in 2019 and ended in 2020.

Furthermore, the Independent Expert PwC has issued a report based on the standard ISAE 3000 “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” stating that Cellnex has an environment of adequate and reasonable control to mitigate the commission of criminal offences entailing criminal liability of legal persons.

The updated version of the Crime Prevention Model and the Independent Expert report were approved by the Committee of Ethics and Compliance and by the Appointments and Remuneration Committee and by the Board of Directors in 2020.

As an essential part of the system of Prevention and Detection of Crimes, Cellnex has adopted a Prevention of Corruption Procedure that obeys the Group’s commitment to conduct its business in an integral, honest, responsible and transparent manner, following the ethical principles in the development of its activity at all times, with a zero-tolerance approach to any form of corruption. The Procedure therefore represents the Group’s commitment to fight against all forms of corruption.

Cellnex is committed to the best global anticorruption practices and, with the assistance of PwC, updated its Corruption prevention procedure in 2020 to align it with the requirements of ISO 37001. The updated version of the Corruption prevention procedure was approved by the Committee of Ethics and Compliance and by the Appointments and Remuneration Committee and by the Board of Directors in 2020.

In this regard, thanks to all the measures developed by Cellnex to prevent corruption, no cases of corruption were identified in 2020, as in 2019.

In 2020 Cellnex, assisted by PwC, carried out a process of verification and testing to check whether existing Cellnex guidelines and controls on prevention of corruption had been met over the course of the contractual relationship between Cellnex and its suppliers. A random sample of suppliers was selected for this purpose.

To reinforce the culture of compliance, ethics and integrity, we expect to appoint a Tax Compliance Officer within the Cellnex group during 2021 to align with the requirements of UNE 19602. Moreover, in 2020 Cellnex adhered to the Code of Best Tax Practices.

Furthermore, a Compliance Plan 2021-2022 is being drafted, the main purpose of which is to improve the control environment and promote compliance awareness within the Group. In order to improve the control environment as stated above, we expect to implement a tool to carry out due diligence of third parties regarding Corruption, money laundering and financing of terrorism, international sanctions, etc.

Code of Ethics

Cellnex’s Code of Ethics, approved in 2015 by the Board of Directors of Cellnex Telecom, S.A., is the fundamental rulebook of the Cellnex group and its aims are:

• To establish general guidelines for action and behaviour.
• To define a mandatory ethical reference framework to govern the working and professional behaviour of those subject to it.
• To create a set of rules of conduct for stakeholders that come into contact with any of the Group companies.
• To establish a regulation for the prevention of corruption to implement the guidelines to be followed in the fight against corruption.

According to the Cellnex group Code of Ethics, the guiding principles of the Cellnex group are the following:

The Code of Ethics was updated in 2019 to align it with the current regulations.

Likewise, information on compliance was updated on the Group’s website and intranet. The provisions of Cellnex group’s General Conditions include a clause referring to the Group’s Code of Ethics that requires suppliers to declare knowledge and full compliance with the contents of the Code of Ethics. Additionally, suppliers must also inform their employees and, if applicable, their subcontractors of the existence and content of the Code of Ethics and ensure that they comply with it. This clause has also been included in the employment contracts of all the new hires of Cellnex group.

Moreover, the training relating to the Code of Ethics was incorporated into the new intranet and is therefore always available to all Group employees. Given the importance of training in compliance, we plan to encourage this aspect and to distribute it more widely via the intranet.

The Cellnex group Code of Ethics has created an Ethical Channel as a confidential way to notify any potentially significant irregularities detected within Cellnex group companies. The Ethical Channel is managed by the Group’s Ethics and Compliance Committee.

In 2020 the Ethics and Compliance Committee continued to make progress disseminating and communicating the Group's Code of Ethics through various actions according to the geographical area concerned.

Ethical Channel

The Ethical Channel allows any employee, or a third party related to the Cellnex group, to report confidentially any kind of breach of the current law and/or other internal regulations that they have detected within the company, and therefore to detect any potentially significant irregularities, particularly relating to financial, accounting, labour and human rights, that arise within the company.

This Ethical Channel is aimed at and is available to all employees of the Cellnex group, regardless of the type or term of their contract, the position they occupy or the geographical area in which they perform their work, and to the various stakeholders (this includes, but is not limited to: suppliers, customers, shareholders, investors, employees, government bodies, regulatory bodies, sectoral associations and international organisations, mass media, partners in shared projects, as well as any other natural or legal person who may have any relationship with Cellnex group) to allow them to report any instances of irregular conduct that come to their attention, provided these are related to their activity in the Cellnex group.

In accordance with the Spanish Data Protection Agency, reports of possible irregularities are confidential; although informants must identify themselves by giving their name, surname(s) and Tax ID Code number when reporting a case, the information about their identity must not appear in the report, but must be filed separately in a restricted access area, to which only members of the Ethics and Compliance Committee will have access, to preserve the informant’s confidentiality.

Notifications of irregularities can be submitted using:

• The Cellnex group’s intranet.
• Email - canal.etico@cellnextelecom.com, by filling out the form available on both the intranet and the website.
• Letters addressed to the Chair of the Ethics and Compliance Committee - Ref. Ethical Channel - Cellnex, Avda.Parc Logístic, 12-20; 08040 Barcelona.

Notifications received via email will be forwarded to all members of the Ethics and Compliance Committee, whilst the Chair of the Ethics and Compliance Committee will notify the other Committee members, via email, of notifications received in the form of letters.

Given the importance of Ethical Channel as a powerful communication tool to report potentially significant irregularities by Cellnex group’s employees and stakeholders, the company works continuously to improve the Ethical Channel, ensuring that it operates correctly.

In this connection, the Ethical Channel was updated in 2019 and a new site for the Ethical Channel created on the corporate website. Training content relating to the Code of Ethics was incorporated into the new intranet that was launched at Group level. All new hires, including employees from new acquisitions, receive training on Code of Ethics and Ethical Channel when they join the group.

All these actions foster a solid culture of compliance within the group. Consequently, the number of notifications was low for the second consecutive year. Two notifications were received through the Group's Ethical Channel in 2020 (three in 2019). None of the notifications received were related to human rights violations or cases of corruption.

Cellnex’s commitment to Human Rights

Cellnex is strongly committed to human rights, both in the Cellnex group and among its stakeholders. During 2018, Cellnex formalised its Human Rights Policy - applicable to the entire organisation - which establishes that Cellnex is committed to protecting and respecting Human Rights in accordance with current international standards.

This policy is developed and complemented by other company internal rules of Corporate Governance, such as the Code of Ethics and the Ethics Channel or ESG Policy. Cellnex Telecom also undertakes to draft and publish a Statement from the organisation on slavery and trafficking in human beings for each financial year (currently available on its corporate website), in response to the United Kingdom Modern Slavery Act, which condemns any practice of labour exploitation and pledges to prevent it both in its activity and its supply chain.

Both the Code of Ethics and the Statement on slavery and trafficking in human beings are based on the main international standards, such as The United Nations Guiding Principles on Business and Human Rights and the International Labour Organization (ILO) Fundamental Conventions.

The Cellnex group’s Code of Ethics reflects the company’s commitment to and involvement with respect for human rights as a fundamental value of its actions, as well as with the principles regulated by the Universal Declaration of Human Rights. The Ethical Channel constitutes a defence mechanism against possible violations of employee’s human rights. In 2020, as in 2019, no complaints were received related to human rights violations.

If the Ethics and Compliance Committee receives a notification regarding inappropriate or illegal conduct or actions, a procedure is initiated. If the Ethics and Compliance Committee decides that the action contravenes the Code of Ethics, the Committee could punish and discipline offenders, in accordance with labour legislation and other applicable regulations, according to the nature of the relationship that exists between the accused and the Cellnex group companies.

To this end, the Ethics and Compliance Committee can transfer the results of the investigation to Human Resources and to the Department where the accused employee works, for their information and so that they can adopt any measures they deem appropriate, where applicable.

Likewise, Cellnex can initiate any legal actions (including criminal) that it may deem appropriate based on the offence committed.

Cellnex group offer training about Human Rights to their employees. In 2020 they received 724 hours of training related to human rights.

The company’s commitment to Human Rights has also been extended to its upstream and downstream supply chain, considering all stakeholders. For detailed information, see Chapter 7. Extending our commitment to the value chain.

In addition, the company wants to take a step further than complying with legal requirements through internal mechanisms that monitor potential human rights issues. Under the ESG Master Plan (2021-2025), Cellnex has committed to identifying and assessing potential and impacts across the company, especially when a due diligence process takes place, and to implementing an action plan to minimise potential human rights issues and impact on the group.

Regulatory environment. Future prospects

Digital Single Market Strategy

The European Commission has been working on the Digital Single Market Strategy since 2015. This strategy compromises three policy pillars:

• Improving access to digital goods and services.
• An environment where digital networks and services can prosper.
• Digital as a driver for growth.

The Digital Single Market helped to lay the ground for the roll-out of the networks that will foster the Gigabit Society in Europe. Among the key elements of the European roadmap are objectives focusing on connectivity, such as the need for at least one 5G network in each Member State by 2020 or the broadband objectives set by the Digital Agenda for Europe (DAE).

Within this strategy, Cellnex has worked to achieve these objectives by deploying connectivity solutions across Europe. For example, Cellnex has been working to provide citizens with connectivity by investing in new and better infrastructures both for rural and urban environments and deploying small cells and DAS nodes located at high demand points.

European Electronic Communications Code

Directive (EU) 2018/1972 of the European Parliament and of the Council of 11 December 2018 establishing the European Electronic Communications Code (Recast) came into force in 2018.

This Directive establishes a harmonised framework for the regulation of electronic communications networks, electronic communications services, associated facilities and associated services, and certain aspects of terminal equipment. It lays down tasks of national regulatory authorities and, where applicable, of other competent authorities, and establishes a set of procedures to ensure the harmonised application of the regulatory framework throughout the Union.

The aims of this Directive are to:

• Implement an internal market in electronic communications networks and services that results in the deployment and take-up of very high capacity networks, sustainable competition, interoperability of electronic communications services, accessibility, security of networks and services and end-user benefits; and
• Ensure the provision throughout the Union of good quality, affordable, publicly available services through effective competition and choice, to deal with circumstances in which the needs of end-users, including those with disabilities to access the services on an equal basis with others, are not satisfactorily met by the market and to lay down the necessary end-user rights.

As stated in Article 124, Member States shall adopt and publish, by 21 December 2020, the laws, regulations and administrative provisions necessary to comply with this Directive. And shall apply those measures from 21 December 2020.

In this regard, Cellnex is working to assess whether any transposition of the European Electronic Communications Code Directive on the different countries could affect Cellnex’s activity.

The Innovation Fund

Cellnex is also considering the possibilities offered by the European Union initiative, The Innovation Fund, for each of the geographies in which Cellnex operates. The Innovation Fund is one of the world’s largest funding programmes for demonstration of innovative low-carbon technologies.

The Innovation Fund is a key funding instrument for delivering the EU’s economy-wide commitments under the Paris Agreement and its objective to be climate neutral Europe by 2050, as also recognised in the European Green Deal Investment Plan.

The first call for proposals under the Innovation Fund was launched in 2020, and it contributes to the green recovery of the EU economy by helping businesses invest in clean energy and clean industry to boost economic growth, create local jobs and give a competitive advantage to EU industry.

Next Generation EU Recovery Funds

Due to the socio-economic fallout from the COVID-19 crisis, EU leaders agreed a recovery package to support the recovery and resilience of the member states' economies. Therefore, a 2021-2027 budget that will help the EU to rebuild after the pandemic and will support investment in the green and digital transitions.

EU leaders have agreed to a comprehensive package of €1,824.3 billion which combines the multiannual financial framework (MFF) and an extraordinary recovery effort under the Next Generation EU (NGEU) instrument.

The MFF will cover the spending of the single market, innovation and digital projects, among other areas of action. And 30% of the total expenditure from the MFF and Next Generation EU will target climate-related projects. Expenses under the MFF and Next Generation EU will comply with the EU’s objective of climate neutrality by 2050, the EU’s 2030 climate targets and the Paris Agreement.

The loans are dedicated to CAPEX (and not OPEX) with a significant impact on the company or in conditions of market failure. The eligibility of the projects must be directly correlated to the impact on GDP, job creation, models of Public Private Partnerships (in line with existing national legislation), co-investment level (with multiplier effect of public investment), level of cooperation and partnership (favourably for multi - partner projects), and cross-border initiatives.

Cellnex is present in various EU countries, and therefore will be able to actively contribute to the achievement of the system objectives of the "EU Digital Single Market". Cellnex can participate actively with a significant multi-national contribution in at least four different types of projects:

• "Ruralisation" (but also applicable to remote and mountainous areas). The aim is to reduce the divide between rural and urban areas and also, thanks to the characteristics of 5G, to help the agricultural sector. It also aims to mitigate depopulation of rural areas by creating the conditions for reliable and resilient access to communication networks and create coverage conditions with high-speed networks for the local development of public services such as education, health services.
• Coverage of cross-border corridors (on rail, road and in tunnels): For the best and accelerated development of 5G services, to achieve seamless coverage conditions between Member States, and to develop pan-European IoT systems and mission critical systems through 5G.
• Densification: For a better future-proof coverage of indoor environments (in public spaces and for public services: hospitals, schools, research centres etc.) and for a better future-proof coverage of outdoor environments (cities, historic centres, villages, nodes of archaeological and naturalistic cultural interest, intermodal transport systems, tourist centres).
• Vertical services: mission and business critical services for the creation of resilient networks at the service of private industries and public sectors (airports, industries, manufacturing, transport and logistics.

As a neutral and technologically agnostic operator, Cellnex also contributes thanks to a model that leverages the cost efficiency of the supply chain through:

• Building all-in-one passive infrastructures with significant improvements in terms of environmental and landscape impact, and in terms of efficient cost-sharing.
• The possibility to free up the resources of operators active in the downstream market (MNOs and FWA operators) to dedicate them to the development of active equipment.

In this regard, these Funds are an opportunity for the activities performed by Cellnex.

Radio Spectrum Policy Programme

Cellnex is also abreast of the European Commission’s work on its new Radio Spectrum Policy Programme (RSPP), expected to end in 2021, that will define Europe’s spectrum direction for 2025-2030. The plan will:

• Free up to 12 GHz of frequencies below 100 GHz for mobile services.
• Explore the spectrum needs of small and medium-sized enterprises and the spectrum for verticals.
• Tackle the future use of the sub700MHz (including its use by broadcasting services).
• Discuss a variety of policy approaches that promote environmental sustainability.
• Explore the use of artificial intelligence in spectrum management and encourage further sharing.

The programme is currently being reviewed by the Radio Spectrum Policy Group (RSPG), an EU advisory body which expects to produce an official Opinion by 2021. The European Commission will then take this Opinion into account and submit the programme as a formal proposal to the European Council and the European Parliament.

The sub-group for the RSPP at the RSPG said that the Opinion would be based on five pillars:

• Strategic spectrum issues: it will continue the current EU strategy of spectrum-sharing, efficiency and innovation.
• Spectrum needs a supporting EU vision: it will discuss how to satisfy the ever-increasing demand for spectrum from different sectors, including verticals.
• Spectrum governance: it will examine the interactions between the European Commission and EU member states, as well as other organisations such as the European regulatory body CEPT or the Radio Spectrum Committee (RSC).
• External relations: it will explore issues like standardisation and harmonisation in a global context, in addition to relations with the ITU and the WRC process.
• External topics: it will examine the role of spectrum in a variety of topics, including COVID-19, EMF (electro-magnetic fields), security and climate change.

Small cells

For 2020 is also worth highlight that the European Commission issued its implementing regulation on a light-touch regime for SAWAPs (Small Area Wireless Access Points) pursuant to Article 57 of the European Electronic Communications Code (EECC, CODE). According to this piece of legislation, under certain conditions, small cells are to be deployed without the need to apply for permits from local authorities and lowering administrative burdens.

Cellnex was involved in the process, taking part in the various workshops organised, exchanges with the consultants who undertook the study for the Commission and discussions with the Commission officials in charge of drafting the legislation. Cellnex also took part in a series of public consultations such as EWIA, Small Cells Forum and digitals.

This new implementing regulation will open new business opportunities for infrastructure providers as it paves the way to facilitating a reasonable and quick roll-out of small cells, and for the deployment of the neutral host model.

EU toolbox

The European Commission published a (non-binding) recommendation on 18 September 2020 to stimulate the roll-out of 5G networks and to reduce the costs of very high-capacity networks. In this way, the Commission calls on member states to develop a common EU approach to 5G and Very high-capacity network (VHCN) deployment based on sharing best practices (toolbox).

The recommendation also explores options to incentivise the environmentally friendly deployment of networks. Reducing greenhouse gas emissions to achieve a climate-neutral continent by 2050 is one of the Commission’s main priorities, along with digitalisation.

The three priorities for the toolbox envisaged to date are:

• Enhanced coordination at Union level on reducing the cost and increasing the speed of deploying very high capacity networks:
  • For the streamline permit-granting procedures, Member States should agree on best practices to facilitate compliance with the maximum deadline of four months under the Broadband Cost Reduction Directive (BCRD) for granting or refusing permits for network deployments. Furthermore, fees for permits should cover only the administrative costs of the provision of the permits. The Commission is even suggesting a permit-free regime for the deployment of small-area wireless access points.
  • Improving transparency through the single information point.
  • Expanding right of access to existing physical infrastructure: Telecoms network operators should be able to obtain access to physical infrastructure controlled by public sector bodies, including buildings, in particular rooftops, and street furniture, such as poles for streetlights, street signs, traffic lights, billboards, bus and tram stops and metro stations.
  • Member States should develop best practices to improve the effectiveness and efficacy of the dispute resolution mechanism regarding disputes related to access to physical infrastructure and the functioning of dispute resolution bodies.
  • Reducing environment footprint and performing environmental impact assessment.
• Action at national level to ensure timely and investment-friendly access to 5G radio spectrum:
  • Spectrum authorisation procedures.
  • Incentives for investment.
• Enhanced coordination at union level on spectrum assignment for cross-border use:
  • Identify use cases.
  • Identify common frequency bands and conditions per use case.

Recommendation on Relevant Markets

The 2014 European Commission Recommendation on Relevant Markets (RRM) provides guidance to National Regulatory Authorities (NRAs) in identifying electronic communications markets within their jurisdiction which are susceptible to ex ante regulation. The Code requires the Commission to review the 2014 RRM by 21 December 2020.

The Draft Commission recommendation on relevant markets only maintains two wholesale broadband access markets: wholesale local access provided at a fixed location which can be used to provide mass market broadband services and bundles; and wholesale dedicated capacity which is mainly relevant for business use requiring a higher quality of connectivity.

The Commission accompanied the draft recommendation with an explanatory note including guidance on geographic market assessment.

Contrary to its earlier suggestion, the Commission does not propose the creation of a separate market for wholesale access to civil engineering. The market for wholesale access to physical infrastructure (i.e. ducts and poles) would not be added to the list of relevant markets. The Commission had initially suggested creating a separate market to correspond with the remedy. However, the Commission concluded that the definition of a separate market would not be appropriate at this moment as the characteristics of physical infrastructure networks vary significantly between member states. NRAs would still be able to define a relevant market at national level, which is particularly relevant in Member States where a single operator owns a physical infrastructure network which is ubiquitous (it has national coverage and can reach all households in the national territory) and suitable for the deployment of alternative fibre networks. In such cases, physical infrastructure access could be a cross-market remedy for multiple purposes, including providing local access, central access, backhaul, and potential future/new emergent services.

According to the Commission, the drafts have been published for transparency reasons. But there is no specific opportunity for stakeholders to give feedback.

The Commission emphasised that the drafts are not the final version, but a document that serves as a basis for discussion with the Body of European Regulators for Electronic Communications (BEREC), which is its main interlocutor. The Commission will take particular account of the opinion from BEREC.

Digital Services Act

As part of the European Digital Strategy, the European Commission has announced a Digital Services Act package to strengthen the Single Market for digital services and foster innovation and competitiveness of the European online environment.

The new Digital Services Act package should modernise the current legal framework for digital services using two main pillars:

• First, the Commission would propose clear rules framing the responsibilities of digital services to address the risks faced by their users and to protect their rights. The legal obligations would ensure a modern system of cooperation for the supervision of platforms and guarantee effective enforcement.
• Second, the Digital Services Act package would propose ex ante rules covering large online platforms acting as gatekeepers, which now set the rules of the game for their users and their competitors. The initiative should ensure that those platforms behave fairly and can be challenged by new entrants and existing competitors, so that consumers have the widest choice and the Single Market remains competitive and open to innovations.

Although it does not directly impact Cellnex, it may be affected as a sector actor.

Broadband Cost Reduction Directive

The European Commission started a review of the Broadband Cost Reduction Directive (BCRD), which could include an extension of its scope with the following objectives:

• Fostering a more efficient and faster deployment of very high capacity networks, including fibre and 5G networks, notably by simplifying procedures and further reducing the administrative burden associated with the deployment of such networks (including when jointly rolling-out/network sharing), enhancing transparency, increased legal certainty as regards cost principles and harnessing the potential of additional private and public assets.
• Strengthening and maximising the potential of the current measures under the BCRD (potential synergies across network sectors (i.e. utilities) in relation to joint use of existing infrastructure and coordinated civil works).
• Complementing and ensuring alignment with the Code, including its scope, which provides the overall framework for the electronic communications sector and is applicable as of 21 December 2020.
• Introducing sustainability measures for the deployment of electronic communications networks (for example, incentivising transition to more energy efficient networks) and contributing to greening the ICT sector.

The Broadband Cost Reduction Directive will be one of the main regulatory debates at European level for the next couple of years. The first Commission legislative proposal is expected for the end of 2021.