Mexico City, April 7, 2021
To the Board of Directors of Telesites, S.A.B. de C.V.

In accordance with article 43, sections I and II of the Mexican Securities Market Act (LMV, by its initials in Spanish), and pursuant to the recommendations contained in the Code of Best Corporate Practices published by the Mexican Business Coordinating Council on behalf of the Audit and Corporate Practices Committee of Telesites, S.A.B. DE C.V. (the “Company” or “Telesites”), we hereby present to you our report on the activities carried out by this corporate committee in fulfillment of its duties during the fiscal year ended December 31, 2020.

One of the basic responsibilities of Company management is to issue financial statements that have been prepared on the basis of applicable financial reporting standards. These financial statements should reflect in a clear, sufficient and when necessary, up-to-date manner, the operations of the Company and the corporations it controls. Furthermore, Company management is charged with introducing appropriate internal control and internal audit systems, and appropriately and promptly disclosing any material information for the investing public as provided for by law.

For its part, as an auxiliary body of the Board of Directors, the Audit and Corporate Practices Committee is responsible for overseeing the management, direction and execution of the Company’s businesses and those of the corporations it controls, and for verifying the Company’s compliance with various operating and internal control procedures. Accordingly, the Company’s Audit and Corporate Practices Committee has reviewed the consolidated financial statements with figures as of December 31, 2020, and the opinion of the Company’s Independent External Auditor regarding that information.

In fulfillment of its primary audit responsibilities, the Committee carried out the following activities:

1. In regular meetings of this corporate body, we were informed of transactions carried out by the Company and the companies it controls in the pursuit of their respective corporate purposes, and the expected results of those projects. The information presented during fiscal year 2020 included the creation of an irrevocable trust identified with number 4594 (the “Trust”) on June 1, 2020, fully restated on July 17, 2020 and modified for the last time on September 29, 2020, with Banco Actinver, S.A., Institución de Banca Múltiple, Grupo Financiero Actinver acting as Trustee, Operadora de Sites Mexicanos, S.A. de C.V. (“OPSIMEX”) acting as Grantor and Administrator) and CIBanco, S.A., Institución de Banca Múltiple acting as Common Representative. The purpose of this Trust is to issue real-estate securities certificates as it acquires eligible assets (telecommunications towers) from OPSIMEX, verifying that those transactions are conducted on the terms approved by the shareholders of the company and of OPSIMEX, respectively, and in accordance with applicable legal provisions.
2. We evaluated the performance of Despacho Mancera, S.C., a member of Ernst & Young Global Limited (“Mancera”), and found it to be acceptable; accordingly, we recommended that the Board of Directors ratify its appointment as Independent External Auditor, to review the financial statements and prepare the corresponding auditors’ opinion of the Company and the corporations it controls for fiscal year 2020. To do so, we verified the appropriate preparation and presentation of the interim financial information for the Company, corroborating that it was clear, precise and in compliance with international financial reporting standards.
3. Before hiring Mancera as Independent External Auditor, we ascertained that this firm: (i) had the personal and professional qualifications and the independence stipulated by laws and provisions in order to provide these services; and (ii) would present its statement on compliance with quality control standards corresponding to the fiscal year audited. We also reviewed the terms of the auditors’ responsibilities.
4. We recommended that the Company’s Board of Directors approve the fees paid to the Independent External Auditor as well as the work program followed for providing its opinion on the financial statements for fiscal year 2020.
5. Effective communications were maintained with the Independent External Auditor, on which basis we are able to report that the quality of the audit report as well as the communiqués and interim reports were consistent with the applicable laws and regulations on the provision of its services.
6. We observed no relevant cases of non-compliance with the operating or accounting guidelines or policies of the Company or its subsidiaries as of December 31, 2020. Therefore, it was not necessary to apply any preventive or corrective actions in the Company.
7. The Company required services other than those of the external audit from the Independent External Auditor during the fiscal year. Those services were engaged following an analysis of their suitability in terms of the applicable legal provisions considering the independence of the Independent External Auditor.
8. We reviewed the financial statements for the Company and its subsidiaries as of December 31, 2020, the Independent External Auditor’s report, and the accounting policies used in preparing the financial statements, and verified that all necessary information was disclosed in keeping with current regulations. After having discussed their content with the persons responsible for preparing them, and having heard the comments of the Independent External Auditor, who is responsible for providing an opinion on the reasonableness of the financial statements and the extent to which they conform to financial reporting standards, we recommended that the Company’s Board of Directors approve those statements for presentation to the ordinary annual shareholders’ meeting of the Company, because we believe they reasonably reflect the Company’s financial situation as of the date indicated.
9. There were no modifications and/or approved authorizations regarding the accounting policies of the Company or its subsidiaries for fiscal year 2020.
10. We followed up on implementation of the Company’s policies and processes regarding risk management, internal control and auditing, as well as the status of the internal control system. Furthermore, the Committee was informed of various non-relevant deficiencies or discrepancies detected by the internal audit area, and in this respect the Company management also informed us of the measures taken to correct them. It should be noted that we detected no relevant breaches of the internal control policies established by the Company.
11. We approved the work program of the internal auditor for fiscal year 2020 and followed up on and verified that it was observed.
12. We supported the Board of Directors in preparing the reports referred to in article 28, section IV of the LMV.
13. We reviewed and recommended that the Board of Directors approve the transactions carried out by the Company under the terms mentioned in article 28 of the Securities Market Law, particularly with regard to transactions with related parties, ascertaining that these were carried out at market values and on the basis of the corresponding transfer price studies. We also saw to it that these transactions were reviewed by the Company’s Independent External Auditor, as indicated in the corresponding note to transactions with related parties in the report on the consolidated financial statements of the Company with data as of December 31, 2020.
14. We followed up on the resolutions of the shareholders’ meeting and the Board of Directors.

Additionally, and in fulfillment of its primary Corporate Practices duties, the Committee carried out the following activities:

1. Evaluated the performance of key executives of the Company and its subsidiaries, as well as the performance of OPSIMEX as Trust Administrator.
2. Reviewed and followed up on Telesites’ transactions with related parties and those of the corporations it controls, which were carried out during the ordinary course of business and under market conditions.
3. Analyzed the process of hiring and compensation of Company employees and key executives, including compensation for Board Members.
4. Based on the analysis of the Company’s results and the interviews held with key executives, we found its performance during the fiscal year to have been satisfactory.
5. No requests were received relating to the dispensations mentioned in article 28, section III, point f) of the LMV.
6. We continued supervision of the Company’s corporate and legal situation, verifying that it remained in compliance with the applicable laws and regulations.

No observations were received from shareholders, board members, key executives, employees or third parties regarding accounting practices, internal controls or issues relating to internal or external audits of the Company, nor were there any reports of material actions or situations deemed irregular in its administration or which may have had an adverse effect on the Company’s financial situation.

We have reviewed the consolidated financial statements of the Company for the fiscal year ended December 31, 2020, and the opinion of the Company’s Independent External Auditor, finding that they were prepared in accordance with accounting policies, procedures and practices consistent with financial reporting standards, and we agree with the content of that opinion as we believe they reasonably reflect the financial position of the Company as of December 31, 2020. We believe the management, direction and execution of the Company’s businesses during fiscal year 2020 was carried out appropriately by Company management.

We make the foregoing statement for the purpose of complying with the obligations entrusted to this corporate body and provided for in the LMV, and with any other duty that has been or is entrusted to us by the Company’s Board of Directors, further noting that in the preparation of this report we took into account the opinion of key executives of Telesites.

 

Sincerely,
Luis Ramos Lignan
Chairman of the Audit and
Corporate Practices Committee
TELESITES, S.A.B. de C.V.