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:
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 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:
The most significant changes made to the Group's Board of Directors in 2020 are as follows:
In 2021 there were significant changes to the Board of Directors as follows:
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:
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.
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).
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.
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 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:
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.
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:
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.
The total hours related to anti-corruption training were 688.75 hours in 2020. The training actions initiated in the Group in 2018 in relation to the Code of Ethics and other related internal regulations continued during 2020. The percentage of personnel trained in 2020 was:
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:
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 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.
The European Commission has been working on the Digital Single Market Strategy since 2015. This strategy compromises three policy pillars:
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.
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:
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.
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.
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:
As a neutral and technologically agnostic operator, Cellnex also contributes thanks to a model that leverages the cost efficiency of the supply chain through:
In this regard, these Funds are an opportunity for the activities performed by Cellnex.
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:
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:
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.
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:
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.
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:
Although it does not directly impact Cellnex, it may be affected as a sector actor.
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:
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.
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