Providing the telecommunications of the future

The Group provides its services in the field of infrastructure management for terrestrial telecommunications in three main business lines: Telecom Infrastructure Services, Broadcasting Infrastructure and Network Services.

Cellnex provides its services primarily through its subsidiaries and indirectly participates in other companies involved in the telecommunications business.

Generally speaking, this balanced set of investments, in terms of both maturity and profitability, and geographic diversification, should contribute to a growing positive contribution from all business sectors. In additional, Cellnex plans to continue identifying new investment opportunities and operational efficiencies that will strengthen its balance sheet and financial position.

Cellnex: The leading wireless telecommunications infrastructure operator in Europe

Infrastructure services for mobile telecommunications operators. Telecom Infrastructure Services. This is the company’s main business by turnover. Cellnex offers co-location services, space in own infrastructures for installing telecommunications equipment in rural and urban sites that are suitable for providing a range of different telecommunication services. The sites are designed and equipped with the resources to provide a high-quality service that offers both availability and network stability. Cellnex also provides operation and maintenance-related services for the infrastructure.

The value creation model involves increasing the consumer ratio of its infrastructure, by incorporating new customers who do not have their own network and view an independent infrastructure operator as the ideal partner for deploying its services, reducing barriers to entry; or by agreements for rationalising existing networks run by a number of telephone operators. Network rationalisation creates efficiencies for the company itself and for mobile operators.

Most of Cellnex’s revenue comes from co-location services on its infrastructure for customers.

• We have more than 15,000 sites
• We operate more than 15% of PoPs (Points of Presence)
• We are committed to developing new generation networks
• Customers can rent the space they need to set up and maintain their communications equipment to transmit wireless data and voice
• We help set up the equipment

Broadcasting Infrastructure.

The broadcasting infrastructure business is the company’s second area of activity by turnover, and the largest in Spain. Its services consist of distribution and transmission of television and radio signals, and the operation and maintenance of broadcasting networks, provision of connectivity for media content, over the top (OTT) broadcasting and other services. Through the provision of broadcasting services, Cellnex has developed unique know-how that has helped to develop the other activities in its portfolio.

The value-generation model, in the broadcasting infrastructure business, is characterised by predictable, recurrent and stable cash flows. Economies of scale are key in this activity, and it is a value-creation model based on sharing the transmission network between broadcasters who do not have their own networks, such as mobile operators.

In addition, Cellnex has established the strategic objective of positioning itself as a leader in Ultra High-Definition Video, 4K technology. This technology provides an image with a resolution that is significantly better than High Definition (1280x720), up to sixteen times higher. Throughout 2016 numerous actions were performed in the Ultra High-Definition area, through collaborative projects such as:

• Broadcast of the Opera (Parsifal) in 4K. Joint project between the RTVE Chair and Hispasat.
• 4K content broadcast during the second edition of 4K SUMMIT. Joint project with RTVE and Rohde & Schwarz.
• Broadcast of the documentary series “Spanish World Heritage Cities” in 4K. Joint project with RTVE.

Following changes that occurred in the audisovisual broadcasting sector in 2015, mainly in relation to the digital dividend, as well as changes in the national audiovisual map, the second digital dividend in 2016 or the freeing up of the 700 MHz broadband spectrum for mobile services represent the most relevant changes to the sector. Likewise, the agreement is awaiting ratification by the European Parliament and the European Council, although it is estimated that it will effectively be freed up in 2020.

Cellnex is also the provider for all State broadcasters, the only operator offering the DTT service nationwide.

Network Services.

Smart means participation, efficiency, security, resiliency and ubiquitous connectivity. Cellnex provides the infrastructure required for the development of a connected society by providing the following network services: Connectivity services; Services for PPDR (Public Protection and Disaster Relief), operation and maintenance; urban infrastructure and other telecommunications services, including the Internet of Things (IoT) and Smart Cities.

As an infrastructure operator, Cellnex can facilitate, streamline and accelerate the deployment of these services through efficient connectivity of objects and people, in both rural and urban environments, helping to build genuinely Smart territories.

Network services activity is a specialised business that creates value through innovative solutions and stable financial flows with attractive growth potential. Given the critical nature of these services - especially those linked to rescue, security and emergency networks - customers of this activity require in-depth technical know-how and demanding service-level agreements. The connectivity of objects is set to grow very significantly in the near future. The Internet of Things (IoT) network is based on a model that connects physical objects and keeps them integrated in a network. The alliance between Cellnex Telecom and IoT network provider Sigfox is evidence of the Group’s commitment to developing this technology both today and in the near future. In this regard, Cellnex’s position as the majority global operator of IoT has become consolidated with more than one million objects connected in Spain’s largest network dedicated to the Internet of Things.

This activity will continue to grow in the security market through our main customer in the home, people and vehicles sector. In addition to this, the main development is occurring in the water metering and smart city services markets.

Small cells and DAS (Distributed Antenna System) services

Users are looking for anywhere and anytime high-quality connectivity. To this end, Cellnex is working closely with MNOs (Mobile Network Operators) to optimise the growing need for coverage in complex scenarios. The life cycle of the solution is therefore based on the acquisition of siting, design, installation, commissioning and monitoring of the quality of the service.

The densification of networks in open and closed crowded spaces is one of the main vectors of growth in telecommunications infrastructure for the coming years. It is estimated that 350,000 small cells will be in operation throughout Europe by 2020.

The acquisition of CommsCon positions Cellnex as a key player in the development and roll-out of telephony and data coverage solutions in high-demand areas. This move involves implementing advanced technologies based on small cells and distributed antenna systems (DAS) providing service to various operators based on a single infrastructure and equipment rolled out. Cellnex has rolled out more than 1,000 DAS nodes with a consumer ratio of 3 MNOs per site, in stadiums, airports, skyscrapers, shopping centres, public areas, metro lines and train stations.

GRI: G4-DMA, G4-2, G4-14, G4-45, G4-46, G4-47, G4-SO3, G4-4, G4-23, PR3, TA1, TA2, TA3, TA4