Annex 7. EU Taxonomy

Turnover

Within activity 8.1, the income from Datacenters is fully included. It is considered as a transition activity in Annex I of Climate Change Mitigation.

Activity 8.3 includes MCPN and 84% of IoT, both considered as facilitating activities for adaptation to climate change as established in Annex II on Adaptation to Climate Change.

Within activity 7.5, 1% of IoT is included. It is considered as a facilitating activity according to Annex I of Climate Change Mitigation.

The most relevant revenue item for the group, Telecommunications Infrastructure Services (TIS), which represents approximately 70% of the group's revenue, could not be included in the eligibility calculations given that within the environmentally sustainable economic activities presented by the regulation, there is still no activity consistent with that carried out by Cellnex. TIS activity is based on the operational efficiency of telecommunications towers by sharing them among various operators, an activity with a positive environmental impact since it avoids the duplication of infrastructures, optimizes the occupied land, reduces the impact on biodiversity and achieves improvements in energy efficiency. The lack of development of the Taxonomy generates damage to the public image of the company, whose main business is linked to operational and energy efficiency.

At the same time, Cellnex has income linked to eligible economic activities higher than that provided in the indicator. Based on Annex II of the Climate Delegated Act (Climate Change Adaptation Activities), certain economic activities of the company fit with activities listed in the aforementioned annex. Broadcast and Internet Media activities, exceeding €200 million in revenue, could not be accounted for as they are classified as “adapted” activities under adaptation activity 8.3, Radio and television programming and broadcast activities. At a methodological level, "adapted" activities are not considered sustainable, greatly affecting Cellnex's revenue KPI. The percentage of eligibility would increase to 11.01% if the activities of Broadcast and Internet Media, considered as adapted, were counted.

The European Parliament and the Council have prioritized the coverage in the regulation of economic activities that can make, from their point of view, the most relevant contribution to the two environmental objectives considered. This first Delegated Act focuses on the climate objectives (mitigation of climate change and adaptation to climate change) and, therefore, includes the most relevant activities for the reduction of greenhouse gas emissions and for the improvement of climate resilience. . This includes the sectors with the highest contribution to CO2 emissions (energy, manufacturing, transport, buildings), as well as the activities that allow their transformation or transition, necessary to achieve the EU climate objectives. This approach poses the paradox that the most polluting sectors such as energy or transport are covered by regulation, while the activities of the digital sector, which have less impact, are not. This is why the eligibility percentages of some companies, to be published in 2022, are going to be much higher than those of Cellnex due to the mere fact that their economic activity or sector is covered by regulation, while a large part of the Cellnex turnover (TIS), not included. The eligibility figures communicate only the percentage of the business linked to activities for which the commission has established sustainability criteria. This percentage does not determine the sustainability of the business, but rather the degree of coverage of the business under the activities proposed in the Taxonomy.

The number of economic activities in the ICT sector represented in the Climate Delegated Act only reaches 4 (6 due to repetitions) out of more than 200, some of them being either too general or specific to bring together a representative part of the companies in the sector.

These activities include:

• Data processing, hosting and related activities
• Data-driven solutions to reduce emissions
• Radio and television programming and broadcasting activities
• Programming, consulting and other computer-related activities

Unfortunately, the bulk of Cellnex's business is not included in the lists of sustainable economic activities or is included as an adapted activity, a categorization that does not allow these to be accounted for in the Taxonomy indicators.

CAPEX

  -  Activity 7.2 includes the entire New Offices item since in 2021 it only includes investments and expenses to renovate, modify, improve and adapt buildings.

  -  Activity 7.5 includes 1% of the Efficiency Capex (Energy) item focused on the installation of photovoltaic solar panels.

  -  Activity 7.6 includes 99% of the Efficiency Capex (Energy) item focused on improvements in energy efficiency of DTT FM and others.

  -  Within activity 8.1, the investments related to Datacenters are fully included.

  -  Within activity 8.3, investments in Radiocommunications (MCPN) and certain investments in IoT are fully included.

The CapEx items considered in the calculation represent (i) those investments in eligible economic activities based on the Taxonomy – especially Datacenters, IoT and Building Renovation - and (ii) activities mentioned in category (c) of section 1.1. 2.2 of Annex I of the Delegated Disclosure Act, related to the purchase of products and individual measures of eligible economic activities or energy efficiency measures. The items included in point (ii) are especially investments in renewable energy equipment and energy efficiency improvements. As is the case with the income section, Cellnex cannot account for investments associated with "adapted" economic activities. These investments are only accounted for if they are investments to adapt the activity(ies) to climate risks based on a specific investment plan. This is the case of investments linked to Broadcast and Internet Media. Similarly, the investment items in activities linked to the operational and energy efficiency of telecommunications towers, such as TIS, could not be accounted for either, since the activities are not considered eligible.

Cellnex has recently published a Financing Plan linked to sustainability (Sustainability-linked Financing Framework), which has obtained a second-party opinion from specialists, stating that it meets international financial sustainability criteria. The framework or plan has the objective of issuing sustainable bonds or obtaining sustainable loans, while meeting strict objectives of decarbonization, use of renewable energy and equality between men and women. However, many of the investments in sustainability cannot yet be counted as eligible since the company does not have a specific Investment Plan linked to the improvement of the KPIs of the Taxonomy.

OPEX

The company considers that the OPEX margin for the calculation of the Taxonomy is not material, mainly and in accordance with the accounting regulations of IFRS16, the most significant item (rental costs) is reflected in the financial interests and in the amortization of the financial statements. of the company. Therefore, it makes the company have a very high operating leverage and margin.