#1Strength and profitable growth telesites Operadora de Sites Mexicanos 2022 ANNUAL REPORT#2LETTER FROM OPERATING AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE SUMMARY Opsimex added 1,653 sites to its portfolio and gained 630 additional rentals from colocations CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 2 The expansion of new towers was due to the purchase of 388 towers in December, as well as improved coverage of our clients' telecommunications network and increased capacity in some towers in rural and urban areas. Contents 03 Opsimex at a glance 03 Corporate Structure 04 Letter from the Executive Committee 07 Solid growth 08 Opsimex Operating Summary 09 FIBRA Sites 10 FSites operating summary 11 Corporate governance 14 Report of the Audit and Corporate Practices Committee 18 Consolidated financial statements 62 Contact About the company Operadora de Sites Mexicanos (Opsimex) is a Mexican company that builds, installs, maintains, operates and sells various types of passive telecommunications infrastructure-towers and support structures, physical spaces and other non-electronic elements. It is the largest tower operator in Mexico, and it has more than 21,000 towers spread across nine regions of the coun- try as well as Costa Rica. The steady pace of technological evolu- tion has brought a constant growth in user demand for data services, which in turn means our clients have a growing need for passive telecommunications infrastructure. This promises significant growth potential for our company.#3LETTER FROM AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 3 OPSIMEX AT A GLANCE 21,702 TOTAL SITES MEXICO: 21,395 Opsimex: 8,273 FSites: 13,122 COSTA RICA: 307 CORPORATE STRUCTURE Operadora de Sites Mexicanos, S.A.B. de C.V REGION SITES Fideicomiso Opsimex 1 904 4594 (FSites) 72.5% 2 1,497 3 1,333 4 2,353 Telesites Costa Rica, S.A. 100% 5 2,664 6 2,402 Towers in Towers in 7 3,769 8 2,816 9 3,657 Mexico (OPSIMEX) included in revenues Mexico (FIBRA) included in revenues Towers in Costa Rica included in revenues December 31, 2019 16,961 299 December 31, 2020 11,292 6,591 304 December 31, 2021 8,059 11,683 307 December 31, 2022 8,273 13,122 307#4LETTER FROM AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 4 TO OUR INVESTORS 3.1% growth in GDP in 2022 TO THE GENERAL SHAREHOLDERS' MEETING AND BOARD OF DIRECTORS OF OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. In accordance with article 44 section XI of the Mexican Securities Market Act, in correlation with article 172 of the General Business Corporations Law, and in my capacity as Chief Ex- ecutive Officer of Operadora de Sites Mexicanos, S.A.B. de C.V. (the "Com- pany" or "Opsimex"), I am pleased to present this report on the Company's operations during the fiscal year end- ed December 31, 2022. 2022 Economic Overview Around the world, economic growth in 2022 was marked by the dynamics of a second year of recovery from the COVID-19 pandemic in 2020. Global GDP grew 3.4%, according to the IMF. The United States economy expanded by 2.1% in 2022, driven by consumer spending on services, which offset the drop in durable and non-dura- ble goods (down -0.4% and -0.5%, respectively). Gross fixed investment rose 4.0% despite the 10.6% plunge in housing investment. In Mexico, GDP advanced 3.1%, led by secondary activities with 3.3%, particularly manufacturing, up 5.2%. The service sector grew 2.8% and retail 5.5%. The Mexican peso closed the year at 19.50 against the US dollar, an annual appreciation of 5.0%. The spread be- B tween Mexican and US interest rates broadened gradually during the year, as Banco de México hiked its bench- mark rate eight times from 5.50% at the close of 2021 to 10.50% at the close of 2022, while the US Federal Reserve raised its rate from 0.25% to 4.50% in the same period. Since the end of 2021, the lingering effects of the pandemic have pushed up the cost of marine container transport by five times their former value, the average price of steel tripled, and a shortage of semiconductors increased automobile prices. Early in 2022, Russia's unconscionable invasion of Ukraine#5AT A GLANCE LETTER FROM EXECUTIVE COMMITTEE SOLID GROWTH OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 5 raised the prices of food, fertilizers, energy and other commodities, which combined with other factors to raise global inflation to levels not seen since the 1980s. In Mexico, inflation closed 2022 at 7.82%, after peaking at 8.70% in September. The core index, which includes goods and services, grew 8.35%, while non- core inflation-made up of food and energy-increased 6.27%. Mexico's trade balance for 2022 was a deficit of USD 26.42 billion, rising from a deficit of USD10.94 billion the year before. Within exports, manufacturing rose 16.6%, while imports rose across the board, with a particularly strong 29.4% growth in consumer goods. The price of Mexico's export blend of oil rose from an average of USD64.60/barrel in 2021 to USD89.26/barrel in 2022. National government finances were stable, thanks to higher tax revenues and restrained current spending. The budget balance was MXN978.53 billion for the year, equivalent to 3.4% of GDP, a little higher than the 2.9% reported in 2021, due to interest rate increases that affected financial costs in 2022. Public-sector debt shrank from 50.8% of GDP to 49.4%. In 2023 the world's economy is ex- pected to slow down due to restrictive policies by central banks across the globe, in an effort to bring inflation back down to their long-term targets; Mexico's economy is prepared, howev- er, and should position itself to take ad- vantage of the shift in US-China trade relations to promote domestic and international investment, refocus sup- ply chains and production of goods toward the United States instead of Asia, and forge even closer trade ties with our neighbor to the north. Report on Opsimex operating and financial results The following are some remarks on the key figures reported in our finan- cial statements for the close of 2022, which are attached to this report, including the opinion of the Indepen- dent Auditor. Our country's economy is prepared, however, and should position itself to take advantage of the shift in US-China trade relations#6AT A GLANCE LETTER FROM EXECUTIVE COMMITTEE SOLID GROWTH OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 6 Opsimex began fiscal year 2022 with a portfolio of 20,049 in- come-generating sites. During the year, 1,653 sites were added to revenues, 1,265 of them built during the year, 194 acquired by Opsimex and 194 by Fideicomiso Opsimex 4594 (FSites, established as a FIBRA, the Mexican equivalent of a U.S. REIT), to end the year with a consolidated portfolio of 21,702 towers, 8,273 of them directly owned by Opsimex, 13,122 owned by FSites and 307 owned by Te- lesites Costa Rica. Over the course of the year, 630 new colocation contracts were added to revenues, bringing our consolidated tenancy ratio of 1.267 operators per tower by the end of 2022. The Company reported total reve- nues of 10.9 billion pesos, a 21.1% growth compared to the previous year, primarily the result of the in- creased number of sites and the new colocations booked during the year. EBITDA closed at 10.3 billion pesos, 22.6% higher than the year before, and the EBITDA margin ended the year at 94.5%. Capital expenditures by Opsimex in 2022 totaled 4.0 billion pesos, includ- ing 2.6 billion pesos for the acquisition of 388 towers by FSites and Opsimex. On February 18, 2022, Opsimex shareholders approved distribution of dividend totaling 1.6 billion pesos, which was paid on May 30, 2022. Opsimex continues to focus on generating stable growth, based on the constant expansion of its clients' networks and the construction of the telecommunication towers they re- quire. The FSites portfolio grew from 11,683 revenue-generating towers to 13,122 at the end of 2022. The company and its subsidiaries have an optimum financial structure for continuing the rate of organic growth they have shown in the past, while remaining open to opportunities that may arise in the market. We are optimistic that the growth trend will maintain this stability going forward. Opsimex reiterates the pledge it has made to employees, clients and sup- pliers, to abide by the quality stan- dards and thus to keep this company growing. Fellow shareholders: We are grateful for the trust you have placed in Oper- adora de Sites Mexicanos, S.A.B. de C.V., and on behalf of our entire work team, we reiterate our commitment to continually improving the perfor- mance of this company's activities. Sincerely, Gerardo Kuri Kaufmann Juan Rodríguez Torres Executive Committee Operadora de Sites Mexicanos, S.A.B. de C.V.#7LETTER FROM AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE OPERATING SUMMARY CORPORATE GOVERNANCE SOLID GROWTH Opsimex continued its steady growth in 2022, adding 1,653 towers to its portfolio during the year, 388 of them acquired in December and the other 1,265 built over the course of the year. In terms of colocations, 630 additional rents were added to our revenues in 2022, bringing the total to 4,246 rents. As a result, Operadora de Sites closed the year with a portfolio of 21,702 towers and a tenancy ratio of 1.267 tenants per tower. AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 7 1,653 sites added in 2022#88.09 8.95 Revenues MXN billion 10.87 EBITDA margin 94.3 LETTER FROM AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 8 94.0 93.8 % MXN billion 7.60 20 21 22 20 21 22 20 21 22 MXN 10.87 billion in total revenues 12.37 oma 8.40 EBITDA 10.26 OPSIMEX OPERATING SUMMARY Results Revenues totaled 10.87 billion pesos in 2022, rising 21.5% compared to 2021. Tower rental revenues came to 7.56 billion pesos. The EBITDA margin for the year was 94.3%, with EBITDA totaling 10.26 billion pesos. At the close of the year, the company held debt totaling 41.79 billion pesos and a cash position of 4.89 billion pesos, which means net debt stood at 36.90 billion pesos.#9AT A GLANCE LETTER FROM EXECUTIVE COMMITTEE SOLID GROWTH OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 9 48 100m FIBRA SITES 1,439 sites added in 2022 Fsites began 2022 with a portfolio of 11,683 revenue-generating sites. During the year, another 1,439 sites were added, 194 of which were acquired in December and the rest were built over the course of the year. At the end of the year, FSites reported a tenancy ratio of 1.282 rents per tower.#10AT A GLANCE LETTER FROM EXECUTIVE COMMITTEE SOLID GROWTH OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 10 FSITES OPERATING SUMMARY 1.16 20 20 Revenues MXN billion 6.36 EBITDA Margin % EBITDA MXN billion 94.2 5.99 21 21 4.36 22 22 20 Results FSites, which is organized as a real-estate investment trust (FIBRA in Spanish), reported total revenues of 6.36 billion pesos, which is a 46.0% increase compared to the previous year. EBITDA closed at 5.99 billion pesos, growing 48.1% year-over-year, while the EBITDA margin stood at 94.2% at the close of 2022. FSites paid out dividends against the 2022 fiscal-year results totaling 1.50 billion pesos, equivalent to 100% of its tax earnings. 6.36 billion pesos in total revenues 92.5 21 22 92.8 22 22 20 20 1.07 22 21 4.04 22 22#11LETTER FROM AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 11 BOARD OF DIRECTORS Our Board of Directors is currently made up of six (6) regular directors with no designated alternates. Our corporate bylaws stipulate that the Board of Directors must have between five and twenty-one directors and up to an equal number of alternate directors. Directors need not be shareholders, but a majority of the directors and their alternates must be Mexican citizens and elected by Mexican shareholders. Directors and their alternates are appointed or reelected at each annual general shareholders' meeting. In accordance with the Mexican Securities Market Act (LMV), qualifying the independence of directors is the responsibility of the shareholders' meeting, though the Mexican Banking and Securities Commission (CNBV) may challenge this qualification. Pursuant to our bylaws and the LMV, at least 25% of board members must be independent. Currently 50% of our directors are independent, a proportion higher than that required by law. Meetings of the Board of Directors may be legally called to order when a majority of its members are present. Our bylaws also state that the members of the Board of Directors are elected for a term of one year. In accordance with the General Commercial Corporations Law (LGSM), however, members of the Board remain in their positions after the expiration of their terms for up to an additional thirty (30) -day period if new members are not elected and substitutes have either not been designated for the departing member, or have not yet assumed their duties. Furthermore, under certain circumstances provided for under the LMV, the Board of Directors may elect temporary directors who then may be ratified or replaced at the shareholders' meetings. The following is a list of the current members of the company's Board of Directors, their position on the Board, their business experience and other board experience, most of which were recently appointed as board members of the Company in a general annual shareholders' meeting held April 28, 2023, on the understanding that these individuals had served as board members of Telesites prior to its entry to the National Securities Registry (RNV) and the listing of the company's stock on the Mexican Stock Exchange. Name Juan Rodríguez Torres Title Туре Years as board Gender member Chairman Independent 7 Male Gerardo Kuri Kaufmann Regular Member Non independent 7 Male Daniel Goñi Díaz Regular Member Independent 1 Male Daniel Díaz Díaz Regular Non Member independent 7 Male Regular Member Non independent 1 Male Luis Ramos Lignan Regular Member Independent 1 Male Víctor Adrián Pandal González For the moment, all of the members of the board are male.#12AT A GLANCE LETTER FROM EXECUTIVE COMMITTEE SOLID GROWTH OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 12 12 Verónica Ramírez Villela and Eriván Urióstegui Hernández serve as secretary and secretary pro tem, respectively, of the Board of Directors of Operadora de Sites Mexicanos, but are not members of that board. We believe that the participation of a woman in these activities from the time of our founding promotes a philosophy of gender inclusiveness in the formation of our governance bodies. The following are brief profiles of each of our board members: Juan Rodríguez Torres Mr. Rodríguez received a bachelor's degree in civil engineering from the Universidad Nacional Autónoma de México. He is 83 years old. He is a board member of Grupo Sanborns, S.A.B. de C.V. and Elementia, S.A. de C.V. (for which he also serves as member of the audit and corporate practices committee), Fortaleza Materiales, S.A.P.I. de C.V. and chairman of its audit and corporate practices committee; Minera Frisco, S.A.B. de C.V. (also chairman of its audit and corporate practices committee), Fomento de Construcciones y Contratas, S.A. and Cementos Portland Valderribas, S.A. and their respective committees. Non-executive chairman of the real estate group REALIA Business, S.A. He is chairman of board of directors of the Red Nacional Última Milla, S.A.P.I. de C.V. and Red Última Milla del Noroeste, S.A.P.I. de C.V. All of the aforementioned companies are considered related or associated parties of the Administrator. Mr. Rodríguez is the founder of various companies in the real estate and footwear industries, as well as board member of Procorp, S.A. de C.V., a real-estate investment company, and a member of the advisory board of Grupo Financiero Banamex. He is currently Chairman of the Board of Directors, member of the audit and corporate practices committee and of the Company's Executive Committee. Daniel Díaz Díaz Bachelor's degree in civil engineering from the Universidad Nacional Autónoma de México. He is 89 years old. He served in the public sector as undersecretary for Infrastructure and Secretary of Communications and Transportation. From 1990 to 1997 he served as a member of the board of the Universidad Nacional Autónoma de México. Mr. Díaz was general director of the Instituto Mexicano del Transporte and, from 2000 to 2001, general director of Caminos y Puentes Federales de Ingresos y Servicios Conexos. From 2003 to 2005 he was an infrastructure project advisor to the Fundación del Centro Histórico de la Ciudad de México, A.C., and currently serves on the boards of Carso Infraestructura y Construcción, S.A. de C.V., Impulsora del Desarrollo y el Empleo en América Latina, S.A.B. de C.V., Red Nacional Última Milla, S.A.P.I. de C.V. and Red Última Milla del Noroeste, S.A.P.I. de C.V. Luis Ramos Lignan Undergraduate degree in Civil Engineering and a master's degree in hydraulics from the Universidad Nacional Autónoma de México. He is 83 years old. He has served as chairman of the Colegio de Ingenieros Civiles de México, the Cámara Nacional de Empresas de Consultoría, A.C., the Asociación de Ingenieros y Arquitectos de México, A.C., the Instituto Mexicano de Auditoría Técnica, A.C., and the Technical Committee of the Fideicomiso Fondo para el Financiamiento de Estudios para Proyectos de Infraestructura. Currently he is chairman and CEO of Ingeniería y Procesamiento Electrónico, S.A. de C.V. Daniel Goñi Díaz Undergraduate degree in law from the Universidad Nacional Autónoma de México. He is 71 years old. He is#13AT A GLANCE LETTER FROM EXECUTIVE COMMITTEE SOLID GROWTH OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 13 notary public number 80 in the State of Mexico and has served as secretary, vice president and president of the Mexican Red Cross on several occasions. He has also been citizen board member of the State of Mexico Electoral Commission. Mr. Goñi Díaz sits on the board of directors of Red Nacional Última Milla, S.A.P.I. de C.V. and Red Última Milla del Noroeste, S.A.P.I. de C.V. Víctor Adrián Pandal González Undergraduate degree in Business Administration from the Universidad Iberoamericana. He is 49 years old. He also holds a master's in business administration from Boston University. From April 2002 to December 2018, he was general director of the Fundación del Centro Histórico de la Ciudad de México, A.C. Currently an independent consultant and founding member of HAN Capital, a real-estate investment fund. Gerardo Kuri Kaufmann Holds a bachelor's degree in industrial engineering from the Universidad Anáhuac. He is 39 years old. From 2008 to 2010, he served as purchasing director of Carso Infraestructura y Construcción, S.A. de C.V. Since the founding of Inmuebles Carso, S.A.B. de C.V., and until April 2016, he was CEO of that company, and today is a member of its board, as well as of the board of all its subsidiaries. He is also a member of the board of directors and CEO of Minera Frisco, S.A.B. de C.V., board member of Elementia Materiales, S.A. de C.V., Realia Business, S.A., Fomento de Construcciones y Contratas, S.A. (where he sits on the Executive Committee), Cementos Portland Valderrivas, S.A. (also delegate board member of that company) and Carso Infraestructura y Construcción, S.A. de C.V. Alternate chairman of the Board of Fortaleza Materiales, S.A.P.I. de C.V. He is currently a member of the company's Executive Committee. There is no relationship, by blood or by marriage, between members of the Company's Board of Directors and its senior executives. The Company does not maintain pension, retirement or other such plans for members of the Board of Directors, senior executives or other parties that may be considered related to the Company. The Audit and Corporate Practices Committee is made up of the following individuals (all of them independent board members according to the LMV definition). Name Position Туре Luis Ramos Lignan Chairman Independent Juan Rodríguez Torres Member Independent Daniel Goñi Díaz Member Independent All members of the Audit and Corporate Practices Committee have extensive experience and an established professional career either as entrepreneurs, public officials or in the private sector. Most of them are or have been board members of various companies in the financial or securities industry and have served in federal public administration and de-centralized government agencies.#14LETTER FROM AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 14 REPORT OF THE AUDIT AND CORPORATE PRACTICES COMMITTEE TO THE BOARD OF DIRECTORS OF OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. In accordance with article 43, sec- tions I and II of the Mexican Securi- ties Market Act (LMV, by its initials in Spanish), and pursuant to the recom- mendations 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 Operadora de Sites Mexicanos, S.A.B. de C.V. (the "Company"), we here- by present to you our report on the activities carried out by this corporate committee in fulfillment of its duties during the fiscal year ended Decem- ber 31, 2022. 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 up-to-date manner, the operations of the Com- pany and the corporations it controls. Furthermore, Company management is charged with introducing appro- priate internal control and internal audit systems, and appropriately and promptly disclosing any material information on the Company and the corporations it controls, for the in- vesting public as provided for by law. 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 Com- pany's businesses and those of the corporations it controls, and for veri- fying the Company's compliance with various operating and internal control procedures. Accordingly, the Com- pany's Audit and Corporate Practices Committee has reviewed the con- solidated financial statements with figures as of December 31, 2022, and the opinion of the Company's internal auditor and Independent External Auditor regarding that information. In fulfillment of its primary audit re- sponsibilities, the Committee carried out the following activities:#15AT A GLANCE LETTER FROM EXECUTIVE COMMITTEE SOLID GROWTH OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 15 • • • • We evaluated the performance of Despacho Mancera, S.C., a member of Ernst & Young Global Limited ("Mancera"), and found it acceptable; accordingly, we recommended that the Board of Directors ratify its en- gagement as Independent External Auditor for the task of reviewing the financial statements and preparing the corresponding financial opinion on the Company and the corporations it controls, for fiscal year 2022. Furthermore, we verified the appropriate preparation and presentation of intermediate financial information by the Company, ascertaining that it was clear, precise, and met all international financial reporting standards. Prior to the engagement of Mancera as Independent External Auditor, we ascertained that said firm: (i) met the personal, professional and indepen- dence criteria established in the applicable law and provisions for render- ing such services; and (ii) presented its statement of compliance with the corresponding quality control standard for the fiscal year audited. We also reviewed the terms of the audit agreement. We approved the fees paid to the Independent External Auditor and its work plan for examining the financial statements of the Company for fiscal year 2022. We maintained effective communications with the Independent External Auditor regarding the activities carried out for preparing its opinion on the Company's financial statements. 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, 2022. 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 External Auditor.#16LETTER FROM AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 16 • • We reviewed the financial statements for the Company and its subsidiar- ies as of December 31, 2022, the report of the internal auditor and the Independent External Auditor's report, and the accounting policies used in preparing the financial statements and verified that all necessary informa- tion was disclosed in keeping with current regulations. There were no modifications and/or approved authorizations regarding the accounting policies of the Company or its subsidiaries for fiscal year 2022. We followed up on implementation of the policies and processes of the Company and the corporations it controls regarding risk management, internal control and auditing, as well as the status of the internal control system. This Committee was informed of various nonmaterial deficiencies or discrepancies detected by the internal audit area, and Company man- agement 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. We approved the work program for the internal auditor for fiscal year 2022 and verified that it was carried out. We supported the Board of Directors in preparing the reports referred to in article 28, section IV of the Securities Market Act. 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 trans- actions 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, 2022.#17AT A GLANCE LETTER FROM EXECUTIVE COMMITTEE SOLID GROWTH OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 17 • 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: • • • • • Evaluated the performance of the Executive Committee and key execu- tives of the Company and its subsidiaries, as well as their performance as administrator of the OPSIMEX 4594 Trust. Reviewed and followed up on transactions with related parties, which were carried out during the ordinary course of business and under mar- ket conditions. Analyzed the process of hiring and compensation of Company employ- ees, the CEO and other key executives, including emoluments paid to Board Members. Based on our analysis of the results of the Company and the various meetings held with the Executive Committee and key executives, we deem their performance in fiscal year 2022 to have been satisfactory. We received no request whatsoever for the exemptions referred to in article 28, section III, point f) of the Securities Market Act 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, the Ex- ecutive Committee, key executives, employees or outside 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 situa- tions 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, 2022, and the opinion of the Independent External Auditor, finding that they were prepared in accordance with account- ing 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, 2022. We believe the management, direction and execution of the Company's businesses during fiscal year 2022 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 Securities Market Act, 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 the Company. Sincerely, Luis Ramos Lignan Chairman of the Audit and Corporate Practices Committee of Operadora de Sites Mexicanos, S.A.B. de C.V.#18LETTER FROM OPERATING AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 18 CONSOLIDATED FINANCIAL STATEMENTS 19 Report of the independent auditors 23 Consolidated statements of financial position 24 Consolidated statements of comprehensive results 26 Consolidated statements of changes in shareholders' equity 27 Consolidated statements of cash flows 28 Notes to the consolidated financial statements#19OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Opinion We have audited the accompanying consolidated financial statements of Operadora de Sites Mexicanos, S.A.B. de C.V. and its subsidiaries (formerly Operadora de Sites Mexica- nos, S.A. de C.V.) (the Company), which comprise the consolidated statement of financial position as at 31 December 2022, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, includ- ing a summary of significant accounting policies. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of Operadora de Sites Mexicanos, S.A.B. de C.V. and its subsidiaries as at 31 December 2022, and their consolidated finan- cial performance and their consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISA). Our responsibilities under those standards are described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are inde- pendent of the Company in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the ethical requirements that are relevant to our audit of the consolidated financial statements in Mexico in accordance with the Código de Ética Profesional del Instituto Mexicano de Contadores Públicos (IMCP Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a sep- arate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the "Auditor's Responsibilities for the Audit of the Consolidated Financial Statements" section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the accompanying consolidated financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements. 1. Property and equipment Description of key audit matter We considered the passive infrastructure under property and equipment as a key audit matter because the valuation of these assets requires the use of assumptions that involve calculations that are subjective and complex, since they require that we seek assistance from specialists of the Company's management and audit specialists to carry out our audit procedures. 19#20OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES How we addressed this key audit matter We evaluated the assumptions used to measure and recognize property and equipment on the basis of a fair value review that we performed in accordance with IAS 16 Property, Plant and Equipment and IFRS 13 Fair Value Measurement. For this review, we consid- ered and evaluated the reconciliation of the beginning and ending balances of property and equipment. Based on audit samples, we analyzed the increases reflected in property and equipment accounts by reviewing and comparing significant items to their respec- tive support documentation. We tested asset depreciation by verifying the mathemat- ical calculations underlying the depreciation and we carried out substantive analytical procedures as well. To determine the existence of potential indicators of impairment, we sought assistance from specialists and we assessed the Company's presentation and disclosure of passive infrastructure in accordance with IFRS. Notes 2h) and 7 to the accompanying consolidated financial statements include disclo- sures regarding the Company's construction and property and equipment. 2. Long-term debt Description of key audit matter We considered the Company's long-term debt a key audit matter due to the high level of professional judgment required for the valuation of these financial liabilities, which are measured at amortized cost, and since they require that we seek assistance from special- ists of the Company's management and audit specialists to carry out our audit procedures. How we addressed this key audit matter We evaluated management's calculation of the Company's debt and we applied analyt- ical testing to the accrued interest on the debt, verifying the amounts of interest against the results of the reconciliation of interest payable. We analyzed the determination of the market value of the debt and the calculation of the interest and we verified the results of these analyses against the terms and conditions of the respective debt contracts. We compared the book balances of the debt against the balances reflected in the confirma- tion of balances that we received from the financial entities with which the Company has contracted the debt. We evaluated the risk of interest rate fluctuations considering the amount of the debt in question. We sought the assistance of specialists to determine the balance of debt recognized at amortized cost. We also evaluated the presentation and disclosure of the Company's structured notes and long-term debt in its financial state- ments considering IFRS requirements. Notes 2e) and 9 to the accompanying consolidated financial statements contain disclo- sures related to this matter. 3. Asset retirement obligation Description of key audit matter We considered the Company's asset retirement obligation a key audit matter due to the high degree of professional judgment required to calculate this obligation and because it requires the use of assumptions that involve estimates that are subjective and complex, since they require that we seek assistance from specialists of the Company's manage- ment and audit specialists to carry out our audit procedures. How we addressed this key audit matter We reviewed the Company's calculation of its asset retirement obligation and we verified the correct valuation of the principal components of the provision in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets. Using audit samples, we reviewed the Company's lease agreements to verify the term of each asset retirement obligation. We also received assistance from a valuation specialist to verify the reasona- bleness of the provision and we assessed the correct presentation and disclosure of the Company's asset retirement obligation in accordance with IFRS. Notes 2m) and 9 to the accompanying consolidated financial statements include disclo- sures related to the Company's asset retirement obligation. Other information Management is responsible for the other information. The other information comprises the information included in the annual report filed with the National Banking and Securi- ties Commission (CNBV, by its acronym in Spanish), but does not include the consolidat- ed financial statements and our auditor's report thereon. We expect to obtain the other information after the date of this auditor's report. Our opinion on the consolidated financial statements does not cover the other informa- tion and we do not express any form of assurance conclusion thereon. 20#21OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES In connection with our audit of the consolidated financial statements, our responsibili- ty is to read the other information when we have access to it and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. When we read and consider the Annual Report filed with the CNBV, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and to issue a statement on the Annual Report required by the CNBV that contains a description of the matter. Our opinion on the consolidated financial statements does not cover the other informa- tion and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibili- ty is to read the other information when we have access to it and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. When we read and consider the Annual Report filed with the CNBV, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and to issue a statement on the Annual Report required by the CNBV that contains a description of the matter. Responsibilities of Management and Those Charged with Governance for the Con- solidated Financial Statements Management is responsible for the preparation and fair presentation of the accompanying consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated finan- cial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Company's financial reporting process. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated finan- cial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISA, we exercise professional judgment and main- tain professional skepticism throughout the audit. We also: . Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures res- ponsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of inter- nal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncer- tainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. 21#22OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 22 22 • Our conclusions are based on the audit evidence obtained up to the date of our audi- tor's report. However, future events or conditions may cause the Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial state- ments represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the con- solidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have com- plied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclo- sure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The partner in charge of the audit resulting in this independent auditor's report is the undersigned. Mancera, S.C. A Member Practice of Ernst & Young Global Limited Alejandro Morán Sámano Mexico City 25 april 2023#23OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Amounts in thousands of Mexican pesos) Assets Current assets: Cash and cash equivalents (Note 4) Accounts receivable Related parties (Note 7) Recoverable taxes Other current assets (Note 6) Total current assets Non-current assets: Property and equipment, net (Note 8) Right-of-use assets (Note 12) Long-term accounts receivable (Note 5) Licenses and software, net Deferred tax assets (Note 17) Other non-current assets (Note 6) Total non-current assets Total assets Liabilities and equity Short-term debt (Note 10) Interest payable on debt (Note 10) Dividends payable Accounts payable and accrued liabilities (Note 15) Taxes and contributions payable Related parties (Note 7) Employee benefits (Note 14) Total current liabilities Non-current liabilities: Long-term debt (Note 10) Deferred tax liability (Note 17) Deferred income tax from sale of structured notes (Note 1.b) Lease liabilities (Note 12) Retirement benefits (Note 13) Asset retirement obligation (Note 9) Total non-current liabilities Total liabilities Equity (Note 16): Share capital Other components of equity Surplus on revaluation of assets Surplus on issue of real estate structured notes (Note 1b) Retained earnings Equity attributable to equity holders of the parent Non-controlling interests Total equity Total liabilities and equity The accompanying notes are an integral part of these financial statements. Ps. As at 31 December 2022 2021 4,888,306 229,148 50,455 454,555 175,373 5,797,837 Ps. 5,686,292 433,651 112,489 2,968,459 146,370 9,347,261 78,016,420 19,392,776 413,694 15,799 29,981 72,674,121 17,127,493 14,286 58,276 159,442 145,991 98,028,112 Ps. 103,825,949 Ps. 90,020,167 99,367,428 Ps. 458,700 Ps. 450,258 549,042 531,840 48,721 169,141 231,667 309,111 222,524 163,071 23,125 50,160 1,747,946 43,844 1,503,258 19,762,785 4,052,802 11,636,971 21,567,400 11,937 1,175,685 58,207,580 59,955,526 19,586,566 4,325,335 11,636,971 18,262,010 13,380 1,056,581 54,880,843 56,384,101 23,733 (16,203,640) 10,050 (16,203,640) 14,509,073 11,480,589 26,635,921 26,635,921 2,283,947 4,673,159 27,249,034 26,596,079 16,621,389 16,387,248 43,870,423 42,983,327 Ps. 103,825,949 Ps. 99,367,428 23 23#24OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands of Mexican pesos) Operating revenue: Infrastructure rent Revenue from alteration services Other income (Note 2t) Operating costs and expenses: Depreciation and amortization (Note 8) Depreciation of right-of-use assets (Note 12) Alteration service costs Operating expenses Other expenses Operating profit Net financing cost: Accrued interest income Accrued interest expense Foreign exchange loss, net Profit before income tax Income tax (Note 17) Net profit Attributable to: Equity holders of the parent Non-controlling interests Weighted average number of outstanding shares (thousands of shares) Basic (loss)/earnings per share attributable to equity holders of the parent Diluted (loss)/earnings per share attributable to equity holders of the parent The accompanying notes are an integral part of these financial statements. 2022 For the year ended 31 December 2021 Ps. 10,545,326 Ps. 8,688,509 140,729 189,464 160,257 102,381 10,875,519 8,951,147 3,882,987 2,172,022 113,845 483,790 3,425,212 1,660,574 70,836 458,254 16,885 6,669,529 4,205,990 22,301 5,637,177 3,313,970 427,643 (3,130,337) (711,486) (3,414,180) 592,197 (2,790,486) (665,875) (2,864,164) 449,806 791,810 651,038 224,543 Ps. 140,772 Ps. 225,263 Ps. (229,197) Ps. 163 369,969 225,100 Ps. 140,772 Ps. 225,263 3,237,517 35,174 $ $ (0.07) (0.07) $ $ EA EA 0.004 0.004 24#25OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Amounts in thousands of Mexican pesos) Net profit Other comprehensive income: Other comprehensive income not to be reclassified to profit or loss in future years, net of taxes: Revaluation surplus, net of taxes Surplus on issue of real estate structured notes Surplus on non-controlling interests Foreign currency translation reserve Labor obligations, net of taxes Total other comprehensive income Comprehensive income Attributable to: Equity holders of the parent Non-controlling interests The accompanying notes are an integral part of these financial statements. 2022 Ps. 140,772 3,028,484 (24,091) 1,394,064 (2,121) 1,137 4,397,473 Ps. 4,538,245 For the year ended 31 December 2021 Ps. 225,263 (2,573,452) 6,620,237 579,898 (292) 2,311 4,628,702 Ps. 4,853,965 Ps. 2,774,212 Ps. 4,048,967 1,764,033 804,998 Ps. 4,538,245 Ps. 4,853,965 25#26OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the Years Ended 31 December 2022 and 2021 (Amounts in thousands of Mexican pesos) (Nota 16) Equity attributable to equity holders of the parent Retained earnings Other comprehensive income Share capital Other components of equity Reserve for repurchase of shares Legal reserve Unapplied income Total Effect of labor obligations Foreign currency translation reserve Surplus on issue Revaluation surplus of real estate structured notes Non-controlling interests Total equity Balance as at 31 December 2020 $ 10,000 $ (16,203,640) $ $ 19,813 $ 5,688,057 $ 5,707,870 $ (1,846) $ $ 14,054,041 $ 20,015,684 $ 12,724,744 $ 36,306,853 Net profit for the year 163 163 225,100 225,263 Other comprehensive income 2,311 Total comprehensive income 163 163 2,311 (292) (292) (2,573,452) (2,573,452) 6,620,237 6,620,237 579,899 4,628,702 804,999 4,853,965 Allocation effect of surplus, net of taxes Issue of real estate structured notes (Note 1b) Effect of merger 635,847 635,847 635,847 2,964,090 Dividends paid 29,106 (1,700,000) 29,106 (1,700,000) 2,964,090 29,106 (1,700,000) Share capital increase 50 50 Cash dividends (106,584) (106,584) Balance as at 31 December 2021 10,050 (16,203,640) 19,813 4,653,173 4,672,986 465 (292) 11,480,589 26,635,921 16,387,248 42,983,327 Profit for the year (229,197) (229,197) 369,969 140,772 Other comprehensive income 1,137 (2,121) Total comprehensive income (229,197) (229,197) 1,137 (2,121) 3,028,484 3,028,484 (24,091) 1,394,064 4,397,473 (24,091) 1,764,033 4,538,245 Allocation effect of surplus, net of taxes Issue of real estate structured notes (Note 1b) Effect of merger 673,951 673,951 673,951 14,141 Dividends paid Creation of reserve for repurchase of shares Repurchase of shares (458) 2,500,000 (1,037,288) Capital reimbursement Share capital increase (16,463) 14,179 (1,769,319) (2,284) (1,769,319) (2,500,000) (2,500,000) 11,856 (1,769,319) (1,037,746) (1,244,112) (1,244,112) Cash dividends Balance as at 31 (285,780) (285,780) December 2022 $ 23,733 $ (16,203,640) $ 1,462,712 $ 3,350 $ 842,787 $ 846,137 $ 1,602 $ (2,413) $ 14,509,074 $ 26,611,830 $ 16,621,390 $ 43,870,423 The accompanying notes are an integral part of these financial statements. 26#27OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands of Mexican pesos) 2022 For the year ended 31 December 2021 Operating activities Profit before income tax Items not affecting cash flows: Depreciation and amortization Accrued interest income Accrued interest expense Foreign exchange loss, net Net periodic benefit expense Changes in operating assets and liabilities: Accounts receivable Related parties Recoverable taxes Other current and non-current assets Accounts payable and accrued liabilities Retirement benefits paid Taxes and contributions payable Net cash flows from operating activities Investing activities Property and equipment Interest received Net cash flows used in investing activities Financing activities Share capital increase Repurchase of shares Capital reimbursement Long-term structured notes obtained Short-term bank loan obtained Structured notes repaid Bank loan repaid - Bank of America Bank loan repaid Issue of real estate structured notes Dividends paid Ps. 791,810 6,055,009 (427,643) 3,130,337 711,486 Ps. 449,806 5,111,337 (592,197) 2,790,485 665,875 2,438 10,263,437 (209,191) 218,844 2,513,904 14,368 (63,105) 3,572 (814,933) 11,926,896 2,350 8,427,948 (304,494) (92,608) 2,428,108 (11,085) 683,907 (354) (1,381,871) 9,749,551 (4,104,142) 427,643 (3,676,499) 14,141 (10,859,562) 592,197 (10,267,315) 50 495,346 1,250,000 (3,000,000) (800,000) 2,967,990 (1,037,746) (1,244,112) 570,000 (60,578) (1,020,000) (2,055,099) (135,591) (1,250,810) (1,303,389) (2,964,179) (2,556,055) Net cash flows used in financing activities (9,048,383) (3,081,699) Net decrease in cash and cash equivalents (797,986) (3,599,463) Cash and cash equivalents at beginning of year 5,686,292 9,285,755 Cash and cash equivalents at end of year Ps. 4,888,306 Ps. 5,686,292 The accompanying notes are an integral part of these financial statements. Interest paid on debt Lease payments 27#28OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 31 December 2022 and 2021 (Amounts in thousands of Mexican pesos, unless otherwise indicated) 1. DESCRIPTION OF THE BUSINESS Operadora de Sites Mexicanos, S.A.B. de C.V. and subsidiaries (Opsimex or the Company) was incorporated in Mexico City on 5 January 2015, as a result of its spin-off from Radiomóvil Dipsa, S.A. de C.V. (Telcel). The Company is primarily engaged in leasing passive mobile telecommunications infrastructure, comprised of physical space throughout its towers, such as floors, roofs and ceilings for the installation of signal transmission and reception equipment and auxiliary equipment (such as power generators or backup batteries, air conditioning and alarm systems and other equipment). As at 31 December 2022 and 2021 and through 15 March 2022, the Company was a 99.99%-owned subsidiary of Telesites, S.A.B. de C.V. (Telesites). Subsequently, Telesites (disappearing company) merged into the Company (surviving company). The Company's operating period and fiscal year is from 1 January through 31 December. The Company's head offices are located in Mexico City at Avenida Paseo de las Palmas 781, 7th floor, offices 703 and 704, Colonia Lomas de Chapultepec III Sección, Miguel Hidalgo, 11000. On 12 April 2023, the consolidated financial statements and these notes were authorized by the Company's Board of Directors, for their issue and subsequent approval by the shareholders, who have the authority to modify the consolidated financial statements. Information on subsequent events covers the period from 1 January 2023 through the above- mentioned issue date of the financial statements. Relevant events At an extraordinary shareholders' meeting held on 20 January 2022, the shareholders discussed and approved the merger of Telesites into the Company. This merger took effect on 15 March 2022, date on which the Company changed its name to Operadora de Sites Mexicanos, S.A.B. de C.V. and its share were listed on the Mexican Stock Exchange. 28#29OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Surplus on issue of real estate structured notes On 20 April 2021, the Company contributed assets and liabilities, comprised of 2,800 towers, distributed across Mexico's 32 states, to Irrevocable Trust 4594 (Banco Actinver, S.A., Institución de Banca Múltiple Grupo Financiero Actinver) (the Trust). In exchange for its contribution, Opsimex received a 72.5% interest in the Trust, while the remaining 27.5% was distributed among public investors. An analysis of the effects of the assets and liabilities transferred as of the above-mentioned dates is as follows: Passive infrastructure contribution to the Trust (2021): Beginning balance of surplus on issue of real estate structured notes 2,800 sites Fair value of real estate structured notes received Amounts Ps. 20,015,684 (1,194,708) 10,640,000 Ps. 29,460,976 Other movements Deferred income tax from sale of structured notes Disposal of leases under IFRS 16 Surplus on issue of real estate structured notes as at 31 December 2021 Remaining value of 2,800 sites Surplus on issue of real estate structured notes as at 31 December 2022 Ps. (2,943,864) 118,809 Ps. 26,635,921 Ps. (24,091) 26,611,830 These transactions amounted a surplus on issue of real estate structured notes of Ps. 26,611,830 and Ps. 26,635,921, as at 31 December 2022 and 2021, respectively, which was recognized in equity. The assets and liabilities transferred include right-of-use assets and lease liabilities of Ps. 1,891,476 and Ps. 2,010,285, respectively, in 2021. As of the above-mentioned date, these amounts were recognized in accordance with IFRS 16 Leases, as part of the Trust and remeasured in accordance with the (current/non-current) terms established in the agreements as of that date. In accordance with IFRS 16, the lessee shall recognize the full termination of the lease in profit or loss at the net carrying amount of the right-of-use assets and lease liabilities at the termination date. Notwithstanding the foregoing, these balances were transferred to the Trust and therefore, were recognized in the consolidated financial statements. Accordingly, they do not constitute a full termination of the lease agreements, but a continuation of the original leases in these consolidated financial statements. In order to reflect the economic substance rather than the legal form of the lease agreements transferred, the net profit of Ps. 118,809 as at 31 December 2021 mentioned above is presented as part of the Surplus on issue of real estate structured notes caption in the consolidated financial statements. The Trust is primarily engaged in the acquisition or construction of eligible assets in Mexico intended to (i) be leased or commercially exploited by granting access to and sharing the passive infrastructure to be used, operated and exploited as a location for active and passive infrastructure, (ii) to acquire the right to receive income from the leasing of these eligible assets or from the rendering of the service, and (iii) to provide financing for these purposes secured by the eligible assets, provided that such financing is performed directly by the Trust or trusts in accordance with the tax provisions related to Infrastructure and real estate trusts (FIBRA, by its acronym in Spanish). 29#30OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Income tax from the sale of these eligible assets could be deferred, but it will ultimately be paid by the seller of the assets, if the Company sells them or the investors sell the structured notes received as consideration for the contribution of the eligible assets. Income tax from this transaction totaled Ps. 11,636,971. Opsimex has control over the Trust and therefore, all of its assets, liabilities and operating results have been consolidated as of the date on which the Company obtained control. Merger of Demonsa and Telesites Internacional At an extraordinary shareholders' meeting held on 21 June 2021, the shareholders agreed to merge Demonsa, S.A. de C.V. and Telesites Internacional, S.A. de C.V. (the disappearing companies) into the Company (the surviving company). This merger took effect on 31 July 2021. Purchase of passive infrastructure On 17 November 2022, in conformity with an asset purchase agreement, the Company purchased from Teléfonos de México, S.A.B. de C.V. (Telmex) a portfolio of 194 telecommunications towers for a sale price of Ps. 1,194,180, and assumed the related rights and obligations. On 7 December 2022, in conformity with an asset purchase agreement, the Trust purchased from Telmex a portfolio of 194 telecommunications towers for a sale price of Ps. 1,390,980, and assumed the related rights and obligations. On 30 November 2021, in conformity with an asset purchase agreement, the Trust purchased from Telmex a portfolio of 958 telecommunications towers for a sale price of Ps. 6,993,400, and assumed the related rights and obligations. 2. BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) effective as at 31 December 2022, as issued by the International Accounting Standards Board (IASB). The preparation of the Company's consolidated financial statements in accordance with IFRS requires the use of critical estimates and assumptions that affect the reported amounts of certain assets and liabilities, and revenue and expenses. It also requires management to exercise judgment in how it applies the Company's accounting policies. The Company's functional and presentation currency is the Mexican peso. b) Consolidation The consolidated financial statements comprise the financial statements of the Company and those of the subsidiaries over which the Company exercises significant control. The financial statements of the subsidiaries have been prepared for the same reporting period and following the same accounting policies as those of the Company. The companies operate in the telecommunications sector or provide services to companies related to these activities. All intercompany balances and transactions have been eliminated on consolidation. The operating results of the subsidiaries were included in the Company's consolidated financial statements as of the month following their constitution. 30#31OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES An analysis of the Company's equity investment in its subsidiaries as at 31 December 2022 and 2021 is as follows: Company name Irrevocable Trust No. 4594, Banco Actinver, Institución de Banca Múltiple Telesites Costa Rica, S.A. (TLC) Telesites Colombia, S.A.S. (TCO) c) Revenue recognition Rental and alteration service income % equity interest as at 31 December 2022 2021 Country Date of first consolidation Type of transaction 72.5% 100% -% 72.5% 100% 100% Mexico Costa Rica Colombia July 2020 August 2021 Infrastructure Infrastructure August 2021 Infrastructure The Company is primarily engaged in leasing passive infrastructure, which consists of non-electronic components used in telecommunications networks, such as towers, masts and other structures designed to support antennas for telecommunications and broadcasting. Alteration services to telephone carriers refer to the modifications that the Company makes to the passive infrastructure. Revenue from contracts with customers is recognized when control of the goods or services is transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements under IFRS 15 Revenue from Contracts with Customers. Rents are reviewed and increased based on the National Consumer Price Index (NCPI) and the amount of rent is generally determined based on the specific characteristics of the sites where the leased passive infrastructure is. d) Use of estimates The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions in certain areas. Actual results could differ from these estimates. The Company based its estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the estimates and their effects are shown in the financial statements when they occur. These assumptions mostly refer to: • Useful life estimates of items of property and equipment • Allowance for expected credit losses Impairment in the value of long-lived assets • Fair value of financial instruments • Employee benefits • Asset retirement obligation 31#32OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 32 22 e) Financial assets and financial liabilities i. Financial assets Initial recognition and measurement Financial assets are classified as subsequently measured at amortized cost, financial assets at fair value through OCI, and fair value through profit or loss. The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Company's business model for managing them. With the exception of trade receivables that do not contain a significant financing component, the Company initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Accounts receivable that do not contain a significant financing component are measured at the transaction price determined under IFRS 15. See accounting policy in Note 2.c) Revenue recognition. In order for a financial asset to be classified and measured at amortized cost or fair value through OCI, it needs to generate cash flows that are solely payments of principal and interest (SPPI) on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level. The Company's business model for managing financial assets refers to how it manages its financial assets in order to generate cash flows for the activities of the business and not a particular intention of holding an instrument. The business model determines whether cash flows will result from collecting contractual cash flows, selling the financial assets, or both. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset. Subsequent measurement For purposes of subsequent measurement, financial assets are classified in four categories: a) Financial assets at amortized cost (debt instruments) b) Financial assets at fair value through OCI with recycling of cumulative gains and losses c) Financial assets designated at fair value through OCI with no recycling of cumulative gains and losses Financial assets at fair value through profit or loss Derecognition of financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily derecognized (i.e., removed from the Company's consolidated statement of financial position) when: . The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of its continuing involvement. In that case, the Company also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. . The rights to receive cash flows from the asset have expired, or#33OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to repay. Impairment of financial assets The Company recognizes an allowance for expected credit losses (ECLS) for all debt instruments not held at fair value through profit or loss. ECLS are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL). For trade receivables, the Company applies a simplified approach in calculating ECLs. Therefore, the Company does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Company has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The Company considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company. ii. Financial liabilities Initial recognition and measurement Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, long-term debt, accounts payable and accrued liabilities. All financial liabilities are recognized initially at fair value and, in the case of long-term debt, including directly attributable transaction costs. The Company's financial liabilities include accounts payable and accrued liabilities, long-term debt and loans to related parties. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below: • Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss. ⚫ Long-term debt • After initial recognition, interest-bearing long-term debt is subsequently measured at amortized cost using the effective interest rate (EIR) method. Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the EIR amortization process. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included as accrued interest expense in the statement of comprehensive income. 33#34OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES • Derecognition of financial liabilities A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss. iii. Offsetting of financial instruments The Company may offset a financial asset and a financial liability and present the net amount in its statement of financial position only when: (i) it has the right and legal obligation to receive or pay an offsetting amount, therefore the Company has, in fact, an offsetting financial asset or liability; and (ii) the net amount resulting from offsetting the financial asset and the financial liability reflects the Company's expected cash flows from settling two or more separate financial instruments. iv. Fair value of financial instruments The fair value of financial instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs. For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using recent arm's-length market transactions; reference to the current fair value of another financial instrument that is substantially the same; a discounted cash flow analysis or other valuation models. The hierarchy used for determining fair values is as follows: . Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities; • • Level 2: Variables other than the quoted prices included in level 1 that are observable for assets or liabilities, either directly (prices) or indirectly (price derivatives); and Level 3: Variables used for assets or liabilities that are not based on observable market data (unobservable variables). Note 10 provides an analysis of the fair values of the Company's financial instruments. f) Cash and cash equivalents Cash in banks earns interest at floating rates on daily account balances. Cash equivalents are represented by short-term deposits made for terms ranging from one day to three days, and which bear interest at rates common for each type of short-term investment. These investments are stated at cost plus accrued interest, which is similar to their market value. g) Current versus non-current classification The Company presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is: • Expected to be realized within twelve months after the reporting period, or . Cash or cash equivalent to be exchanged or used to settle a liability for at least twelve months after the reporting period. . All other assets are classified as non-current. 34#35OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES A liability is current when: • It is due to be settled within twelve months after the reporting period, or . There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period • The Company classifies all other liabilities as non-current. h) Property and equipment, net The Company's property includes passive infrastructure, which includes non-electronic components used in telecommunications networks, including masts, towers and posts. These fixed assets are measured at fair value using the revaluation model specified in IAS 16 Property, Plant and Equipment. Company management periodically reviews the stated amounts of the Company's fixed assets whenever it believes that there is a significant difference between the carrying amount of an asset and its fair value. Depreciation is determined on fair values on a straight-line basis over the estimated useful lives of the assets starting at the time the assets are available for use. The Company's equipment is carried at cost, net of accumulated depreciation, in accordance with IAS 16 Property, Plant and Equipment. Depreciation is determined on the assets' carrying amounts on a straight-line basis over the estimated useful lives of the assets, starting the month after the assets are available for use. The Company periodically reviews the residual values, useful lives and depreciation methods of its fixed assets and adjusts them prospectively where appropriate at the end of each reporting period, in accordance with IFRS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The revaluation surplus is recycled to retained earnings in the same proportion as the accounting depreciation over the useful live of the asset and, if the revalued asset is derecognized, the revaluation surplus is transferred to retained earnings without affecting the profit or loss for the period. An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in other operating income or other operating expenses when the asset is derecognized. Annual depreciation rates for 2022 and 2021 are as follows: Passive infrastructure Computer equipment Automotive equipment Other equipment 3.33% to 6.67% 30% 25% 10% i) Licenses and software The licenses and software acquired by the Company are classified as intangible assets with finite useful lives that are recognized at cost. Amortization of these intangible assets is calculated on the assets' carrying amounts on a straight-line basis based on the estimated useful lives of the assets. The annual amortization rate for acquired licenses is 15%. j) Impairment in the value of long-lived assets The Company assesses at each reporting date whether there is an indication that its long-lived assets may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount, which is higher than the asset's fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired, and its carrying amount is written down to its recoverable amount, and the loss is immediately recognized in profit or loss. 35#36OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES The depreciation and amortization expense for future periods is adjusted to the new carrying amount during the remaining useful life of the related assets. Recoverable amounts are determined for each individual asset, unless the asset generates cash inflows that are closely dependent on the cash flows generated by other assets or group of assets (cash generating units). The carrying amount of property and equipment is reviewed annually to verify if there are indicators of impairment in the value of such assets. When the recoverable amount of an asset, which is the higher of the asset's expected net selling price and its value in use (the present value of future cash flows) is less than its net carrying amount, the difference is recognized as an impairment loss. As at 31 December 2022 and 2021, there were no indicators of impairment in the value of the Company's fixed assets. k) Leases The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets, even if that asset is not explicitly specified in an arrangement. The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. All other contracts are considered service contracts. The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets (based on their relative materiality). The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. i. Right-of-use assets The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation or amortization and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the initial amount of lease liabilities recognized, initial direct costs incurred by the lessee, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated or amortized on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets as follows: Buildings Motor vehicles and offices 5 to 12 years 1 to 4 years The right-of-use assets are also subject to impairment. Refer to the accounting policy on impairment in the value of non-financial assets in Note 2j). ii. Lease liabilities At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs. The Company discounts the present value of the future cash flows for its leases that are within the scope of IFRS 16 using an incremental borrowing rate, which is the rate of interest that the Company would have to pay to borrow over a similar term the funds necessary to obtain an asset of a similar value to the leased asset. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. The Company presents its lease liabilities separately from other liabilities in the statement of financial position. 36#37OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 1) Provisions, contingencies and commitments Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provision amounts are determined as the present value of the expected outflow of resources to settle the obligation. The provisions are discounted using a pre-tax rate that reflects the current market conditions at the date of the statement of financial position and, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense. Contingent liabilities are recognized only when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation. Also, contingencies are recognized only when they generate a loss. m) Asset retirement obligation The Company records a reserve for the decommissioning costs associated with the sites where its passive infrastructure is located. Decommissioning costs are measured at the present value of the costs expected to be incurred to settle the Company's obligation to decommission the assets. These costs are determined on the basis of the estimated cash flows and the asset retirement costs are capitalized as part of the carrying amounts of the related assets. For purposes of this calculation, cash flows are discounted at a pre-tax rate that reflects the risks associated with the asset retirement obligation. Reversals of previous discount rates are recognized in profit or loss as a financing cost as incurred. Estimated future decommissioning costs are reviewed annually and are revised where needed. Changes in future cost estimates or discount rates are recognized as an increase or a decrease in the carrying amount of the asset. n) Employee benefits The Company annually recognizes the liability for seniority premiums based on independent actuarial calculations applying the projected unit credit method, using financial assumptions net of inflation. The latest actuarial calculation was prepared on 31 December 2022. The Company creates a provision for the costs of compensated absences, such as paid annual leave, which is recognized using the accrual method. o) Employee profit sharing On September 1st 2021, as a result of the labor outsourcing reform, the Company hired the employees of Demonsa, S.A. de C.V. (the Transferor), and assumed all labor obligations related to past services. Accordingly, the Company recognized a defined benefit obligation and any other assumed labor obligations through profit or loss for the year. The Company is only required to pay employee profit sharing based on its own profits. As a result of the labor outsourcing reform, in 2021 the method used to calculate employee profit sharing was modified. New requirements were established, whereby the employee profit sharing payable to each employee is capped at three times their current monthly wage or the average employee profit sharing received by the employee in the three prior years (assigned employee profit sharing), whichever is higher. If the amount of employee profit sharing determined by applying the 10% rate to taxable profit is higher than the sum of the employee profit sharing allocated to each employee, the latter must be considered as the amount of employee profit sharing payable for the period. In accordance with the Mexican Labor Law, the difference between these two amounts does not generate a payment obligation either in the current or future periods. If current employee profit sharing calculated using a 10% rate of an entity's taxable profit is equal to or less than the amount of the employee profit sharing assigned to each employee, the former shall be considered as the current employee profit sharing for the period. 37#38OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES p) Income tax Current income tax is recognized as a current liability, net of prepayments made during the year. Deferred income tax is calculated using the asset and liability method established in IAS 12 Income Taxes. Deferred income tax is calculated using the asset and liability method, based on the temporary differences between financial reporting and tax values of assets and liabilities at the reporting date. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. q) Uncertain tax positions The Company periodically evaluates positions taken in the tax returns with respect to situations where applicable tax regulations are subject to interpretation, and considers whether it is probable that the tax authorities will accept an uncertain tax treatment. Tax balances are determined based on the 'most likely amount method' or the 'expected value' method, depending on which approach best predicts the resolution of the uncertainty. r) Statement of cash flows The statement of cash flows reports the cash generated and used by the Company during the year. It first shows the Company's profit before income tax, followed by its cash flows resulting from operating activities, then its cash flows resulting from investing activities, and lastly its cash flows resulting from financing activities. For the years ended 31 December 2022 and 2021, the statement of cash flows was prepared using the indirect method. s) Concentration of risk The Company's principal financial instruments used to fund the Company's operations comprise bank loans, lines of credit, accounts payable and related party payables. The Company's principal financial assets include cash and cash equivalents, accounts receivable, related party receivables and other assets that derive directly from its operations. The main risks associated with the Company's financial instruments are cash flow risk and market, credit and liquidity risks. The Company performs sensitivity analyses to measure potential losses in its operating results based on a theoretical increase of 100 basis points in interest rates. The Board of Directors approves the risk management policies that are proposed by Company management. Credit risk is the risk that a counterparty will default on its payment of obligations with the Company. The Company is also exposed to market risks associated with fluctuations in interest rates. Financial assets which potentially subject the Company to concentrations of credit risk are cash and cash equivalents, short-term deposits and debt instruments. The Company's policy is designed to avoid limiting its exposure to any one financial institution. The Company continuously monitors its customer accounts and a portion of the Company's surplus cash is invested in time deposits in financial institutions with strong credit ratings. The table below summarizes the maturity profile of the Company's financial liabilities based on contractual undiscounted payments. 38#39OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Year ended 31 December 2022 Interest-bearing loans and borrowings Accounts payable and other creditors Year ended 31 December 2021 Interest-bearing loans and borrowings Accounts payable and other creditors Less than 3 More than 5 On demand months 3 to 12 months 1 to 5 years years Total Ps. Ps. 982,098 107,305 Ps. Ps. Ps. Ps. Ps. 1,089,403 Ps. Ps. Ps. 19,586,566 Ps. 20,568,664 107,305 19,586,566 Ps. 20,675,969 On demand Less than 3 months More than 5 3 to 12 months 1 to 5 years years Total Ps. Ps. Ps. 982,106 142,403 Ps. 1,124,509 Ps. Ps. 541,880 Ps. Ps. Ps. 541,880 Ps. 19,044,686 Ps. 20,568,672 142,403 19,044,686 Ps. 20,711,075 t) Statement of comprehensive income presentation Costs and expenses shown in the Company's consolidated statement of comprehensive income are presented based on a combination of their function and their nature, which provides a clearer picture of the components of the Company's operating profit, since such classification allows for comparability of the Company's financial statements with those of other companies in its industry. Although not required to do so under IFRS, the Company includes operating profit in the statement of comprehensive income, since this item is an important indicator for evaluating the Company's operating results. Operating profit consists of ordinary revenues and operating costs and expenses. An analysis of the Company's other income for the years ended 31 December 2022 and 2021 is as follows: Restatement of recoverable value added tax Unrealized loss on valuation of contracts Recovery of expenses Revenue from rent paid in advance Recovery of rental expenses Other 2022 2021 Ps. 170,705 15,041 3,250 Ps. 86,466 8,610 1,413 1,841 114 2,804 Ps. 354 189,464 1,247 Ps. 102,381 39#40OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 40 40 3. NEW ACCOUNTING PRONOUNCEMENTS The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issue of the Company's financial statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective. a) Standards issued but not yet effective IFRS 17 Insurance Contracts In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts (IFRS 4) that was issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features. A few scope exceptions will apply. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in IFRS 4, which are largely based on grandfathering previous local accounting policies, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. The core of IFRS 17 is the general model, supplemented by: • A specific adaptation for contracts with direct participation features (the variable fee approach) • A simplified approach (the premium allocation approach) mainly for short-duration contracts IFRS 17 is effective for reporting periods beginning on or after January 1st 2023, with comparative figures required. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before the date it first applies IFRS 17. Amendments to IAS 1: Classification of Liabilities as Current or Non-Current In January 2021, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current. The amendments clarify: What is meant by a right to defer settlement • • That a right to defer must exist at the end of the reporting period • That classification is unaffected by the likelihood that an entity will exercise its deferral right That only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification The amendments are effective for annual reporting periods beginning on or after January 1st 2023 and must be applied retrospectively. The Company is currently assessing the impact the amendments will have on current practice and whether existing loan agreements may require renegotiation.#41OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2 In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgments, in which it provides guidance and examples to help entities apply materiality judgments to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their 'significant' accounting policies with a requirement to disclose their 'material' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures. The amendments to IAS 1 are applicable for annual periods beginning on or after January 1st 2023 with earlier application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on the application of the definition of material to accounting policy information, an effective date for these amendments is not necessary. The amendments are not expected to have a material effect on the Company's Financial Statements. Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12 In May 2021, the Board issued amendments to IAS 12, which narrow the scope of the initial recognition exception under IAS 12, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences. The amendments should be applied to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period presented, a deferred tax asset (provided that sufficient taxable profit is available) and a deferred tax liability should also be recognized for all deductible and taxable temporary differences associated with leases and decommissioning obligations. The amendments are not expected to have a material effect on the Company's Financial Statements. b) New and amended standards and interpretations in 2021 Onerous Contracts - Costs of Fulfilling a Contract - Amendments to IAS 37 In May 2021, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when assessing whether a contract is onerous or loss-making. The amendments apply a "directly related cost approach". The costs that relate directly to a contract to provide goods or services include both incremental costs and an allocation of costs directly related to contract activities. General and administrative costs do not relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under the contract. The amendments are effective for annual reporting periods beginning on or after January 1st 2022. These amendments had no impact on the Company's consolidated financial statements. Reference to the Conceptual Framework - Amendments to IFRS 3 In May 2021, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework. The amendments are intended to replace a reference to the Framework for the Preparation and Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for Financial Reporting issued in March 2018 without significantly changing its requirements. The Board also added an exception to the recognition principle of IFRS 3 to avoid the issue of potential 'day 2' gains or losses arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 Levies, if incurred separately. At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent assets that would not be affected by replacing the reference to the Framework for the Preparation and Presentation of Financial Statements. The amendments are effective for annual reporting periods beginning on or after January 1st 2022 and apply prospectively. The amendments are not expected to have a material effect on the Company's consolidated financial statements. 41#42OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 42 42 Property, Plant and Equipment: Proceeds before Intended Use - Amendments to IAS 16 Leases The amendment prohibits entities from deducting from the cost of an item of property, plant and equipment, any proceeds of the sale of items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such items, and the costs of producing those items, in profit or loss. In accordance with the transitional provisions, the Company applies the amendments retrospectively only to items of property, plant and equipment made available for use on or after the beginning of the earliest period presented when the entity first applies the amendment (the date of initial application). These amendments had no impact on the consolidated financial statements of the Company as there were no sales of such items produced by property, plant and equipment made available for use on or after the beginning of the earliest period presented. 4. CASH AND CASH EQUIVALENTS An analysis of cash and cash equivalents as at 31 December 2022 and 2021 is as follows: Cash Banks Readily marketable securities 2022 2021 Ps. 5 Ps. Ps. 65,676 4,822,625 4,888,306 Ps. 5 94,186 5,592,101 5,686,292 5. ACCOUNTS RECEIVABLE With regard to the bankruptcy proceeding filed by Altán Redes, S.A.P.I. de C.V., on 28 October 2022, the First District Judge in bankruptcy matters, residing in Mexico City and with jurisdiction throughout the country, issued a ruling approving the Bankruptcy Agreement dated 13 October 2022 filed by the bankruptcy mediator on 14 October 2022. With respect to the Bankruptcy Agreement, the Company, in its capacity of creditor, did not grant any reduction to Altán Redes, S.A.P.I. de C.V., and the interest accrued on the recognized debt will be capitalized during the term of the agreement at the 28-day Mexican Weighted Interbank Interest Rate (TIIE, by its acronym in Spanish). The loan matures on 31 December 2056; however, the debtor can make prepayments if they have available cash flows and have settled all other debt balances with priority of payment. As at 31 December, the long-term account receivable amounted to Ps. 413,694. On 9 May 2022, the Company entered into an amending agreement to the commercial agreement entered on 29 May 2019 with Altán, whereby the latter was required to pay the outstanding debt balances accrued since December 2020. For purposes of this agreement, a discount of 17% was applied to the rental price for tower space, in accordance with the following: • • . The contractual commitment for each tower will be for terms of ten years. A 17% discount is to be applied through the issuance of credit memos, solely and exclusively on the rental price for the approved tower space, for the first 3 years from 17 November 2021 to 16 November 2024, with a payment period of 180 calendar days from the issuance of the invoice, which shall be issued within the corresponding month. At the end of the 3-year period beginning on 17 November 2024, Altán shall have a period of 90 calendar days from the issuance of the invoice to make the payment. Should Altán fail to make any payment for the services to be rendered, there will be no grace period.#43OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 6. OTHER CURRENT AND NON-CURRENT ASSETS An analysis of other current and non-current assets as at 31 December 2022 and 2021 is as follows: 2022 2021 Ps. 19,313 Ps. 21,680 Advances to suppliers 63,512 31,140 Creditable input value added tax, net 28,356 24,115 Prepaid insurance 64,192 69,435 Fees and subscriptions Ps. 175,373 Ps. 146,370 Total other current assets Security deposits Total other non-current assets Ps. 159,442 Ps. 145,991 Ps. 159,442 Ps. 145,991 7. RELATED PARTIES a) An analysis of balances due from and to related parties as at 31 December 2022 and 2021 is provided below. The companies mentioned in this note are considered associates or affiliates of the Company, since the Company's principal shareholders hold direct or indirect stakes in these companies. 2022 2021 Receivables: Radiomóvil Dipsa, S.A. de C.V. Ⓡ Telesites, S.A.B. de C.V. (viii) Teléfonos de México, S.A.B. de C.V. (ii) Other related parties Payables: Operadora Cicsa, S.A. de C.V. (ix) Teléfonos de México, S.A.B. de C.V. (iii) PC Industrial, S.A. de C.V. (xi) Radiomovil Dipsa, S.A. de C.V. Seguros Inbursa, S.A., Grupo Financiero Inbursa (X) Other related parties Ps. 44,626 Ps. 58,071 29,519 5,486 24,201 343 698 Ps. 50,455 Ps. 112,489 Ps. 8,251 Ps. 14,604 149,949 16 506 4 2,051 3,762 3,311 1,089 2,653 Ps. 163,071 Ps. 23,125 43 43#44OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES b) During the years ended 31 December 2022 and 2021, the Company had the following transactions with its related parties: Revenue: Radiomóvil Dipsa, S.A. de C.V. Claro Costa Rica, S.A. de C.V. Teléfonos de México, S.A.B. de C.V. Teléfonos del Noreste, S.A. de C.V. Torres Latinoamérica, S.A. de C.V. Carso Electric, S.A. de C.V. Telesites S.A.B. de C.V. Expenses: Leasing (1) Alteration services (i) Leasing (ii) Leasing (ii) Leasing (iv) Expense reimbursements Recovery of expenses (vi) Interest (vii) 2022 2021 Ps. 9,088,800 140,729 Ps. 7,718,877 160,257 122,547 124,186 335,813 6,213 1,857 1,704 537 22 1,146 95,339 138,590 65,435 52,810 Insurance (ix) 42,754 37,700 Maintenance (x) 344 20,490 160 1,040 1,327 165 8,583 8,349 715 2,585,160 6,993,400 819 621 Operadora Cicsa, S.A. de C.V. Radiomóvil Dipsa, S.A. de C.V. Seguros Inbursa, S.A., Grupo Financiero Inbursa PC Industrial, S.A. de C.V. Consorcio Red Uno, S.A. de C.V. Grupo Sanborns, S.A. de C.V. Fianzas Guardiana Inbursa, S.A. Acolman, S.A. Administradora Carso Palmas, A.C. Teléfonos de México, S.A.B. de C.V. Leasing (ii) Teléfonos del Noroeste, S.A. de C.V. Alquiladora de casas, S.A. de C.V. Carso Infraestructura y Construcción, S.A. de C.V. Sears Operadora México, S.A. de C.V. Sanborns Hermanos, S.A. de C.V. Construction (viii) Leasing (i) Leasing (xi) Leasing (xii) Insurance (xiii) Leasing (xiv) Leasing (xv) Fixed assets (iii) Leasing (iv) Leasing (xvi) Maintenance (xviii) Compañía de Teléfonos y Bienes, S.A. de C.V. Industrial Afiliada, S.A. de C.V. Other 86,849 Construction services (xvii) 1,135 921 Leasing (xix) Leasing (xx) Leasing (xxi) Leasing 1,742 127,068 5,930 9 1,554 (i) In accordance with the current reference offer for each year, each month the Company enters into several lease agreements with Telcel for the use of the Company's passive infrastructure and the provision of alteration services. All leases are for terms of 10 years, but at inception, the agreements are amended to extend the lease term depending on the circumstances of each particular site. As a result, the leases have maturities all the way through 2032 and include an option to renew for similar terms. Leased passive infrastructure is comprised of non-electronic components used in telecommunications networks, including but not limited to masts, towers, posts, sites, land and physical space. Alteration services refer to the modifications that the Company makes to passive infrastructure at the request of Telcel. For the years ended 31 December 2022 and 2021, revenue earned from these passive infrastructure leasing and alteration services totaled Ps. 9,088,800 and Ps. 7,718,877, respectively. The account receivable due from Telcel as at 31 December 2022 and 2021 is Ps. 44,626 and Ps. 58,071, respectively. As at 31 December 2022 and 2021, revenue earned from alteration services recognized in profit or loss totaled Ps. 140,729 and Ps. 160,257, respectively. 44#45OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 45 45 (ii) During 2022 and 2021, the Company's transactions related to the use of passive infrastructure with Claro Costa Rica, S.A. (Claro) recognized in profit or loss totaled Ps. 122,547 and Ps. 124,186, respectively. (iii) During 2022 and 2021, the Company's transactions related to the use of passive infrastructure with Teléfonos de México, S.A.B. de C.V. (Telmex) recognized in profit or loss totaled Ps. 335,813 and Ps. 6,213, respectively. As at 31 December 2022 and 2021, the account receivable due from Telmex was Ps. 5,486 and Ps. 24,201, respectively. As at 31 December 2022 and 2021, the Company purchased a portfolio of towers from Telmex for a total sale price of Ps. 2,585,160 and Ps. 6,993,400, respectively. As at 31 December 2022, the account payable due to Telmex was Ps. 149,949. (iv) During 2022 and 2021, the Company's transactions related to the use of passive infrastructure with Teléfonos del Noreste, S.A. de C.V. (Telnor) recognized in profit or loss totaled Ps. 1,857 and Ps. 1,704, respectively. (v) During 2022, the Company's expense reimbursement from Torres Latinoamérica recognized in profit or loss totaled Ps. 537. (vi) During 2021, the Company paid interest to Telesites totaling Ps. 1,146. (vii) During 2022 and 2021, the Company had transactions related to the construction of passive infrastructure with Operadora Cicsa, S.A. de C.V. (CICSA). Maintenance expense was Ps. 95,339 and Ps. 138,590, respectively. As at 31 December 2022 and 2021, the account payable due to CICSA was Ps. 8,251 and Ps. 14,604, respectively. (viii) During 2022 and 2021, the Company entered into insurance agreements described in its passive infrastructure lease agreements, with Seguros Inbursa, S.A., Grupo Financiero Inbursa (Inbursa). For the years ended 31 December 2021 and 2020, the Company's total charge for insurance costs was Ps. 42,754 and Ps. 37,700, respectively. As at 31 December 2022 and 2021, the account payable due to Inbursa was Ps. 3,762 and Ps. 3,311, respectively. (ix) During 2022 and 2021, the Company had transactions related to preventive maintenance for passive infrastructure with PC Industrial, S.A. de C.V. (PCIS). Maintenance expense was Ps. 344 and Ps. 20,490, respectively. As at 31 December 2022 and 2021, the account payable due to PCIS was Ps. 16 and Ps. 506, respectively. (x) During 2021, the Company had transactions related to leases with Consorcio Red Uno totaling Ps. 160. (xi) During 2022 and 2021, the Company had transactions related to leases of sites for passive infrastructure with Grupo Sanborns, S.A. de C.V. (Sanborns) totaling Ps. 1,040 and Ps. 1,327, respectively. (xii) During 2021, the Company had transactions related to leases with Fianzas Guardiana Inbursa, S.A. (Guardiana) totaling Ps. 165. (xii) During 2022 and 2021, the Company had transactions related to leases with Acolman, S.A. (Acolman) totaling Ps. 8,583 and Ps. 8,349, respectively. (xiv) During 2021, the Company had transactions related to leases with Administradora Carso Palmas, A.C. (Administradora) totaling Ps. 715. (xv) During 2022, the Company had transactions related to leases with Alquiladora de Casas, S.A. de C.V. totaling Ps. 86,849. (xvi) During 2022, the Company had transactions related to leases with Carso Infraestructura y Construcción, S.A. de C.V. totaling Ps. 1,135. (xvii) During 2022, the Company had transactions related to leases with Sears Operadora México, S.A. de C.V. totaling Ps. 992. (Xviii) During 2022, the Company had transactions related to leases with Sanborns Hermanos, S.A. de C.V. totaling Ps. 1,742. (xix) During 2022, the Company had transactions related to leases with Compañía de Teléfonos y Bienes, S.A. de C.V. totaling Ps. 127,068. (xx) During 2021, the Company had transactions related to leases with Industrial Afiliada, S.A. totaling Ps. 5,930.#46OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 8. PROPERTY AND EQUIPMENT, NET The Company has two main types of towers: rooftop towers and greenfield towers, which are located in open areas. Most of the Company's greenfield towers can accommodate up to three customers, except for towers that are more than 45 meters high, which can accommodate up to five customers. Rooftop towers equipped with additional masts can accommodate more customers, provided that there is sufficient floor space available on-site to install the additional masts. As at 31 December 2022, the Company's passive infrastructure is comprised of 21,521 towers (19,759 towers as at 31 December 2021). The Company's passive infrastructure is located in Mexico, distributed across nine cellular regions as defined by telecommunications sector rules and regulations. An analysis of property and equipment as at 31 December 2022 and 2021 is as follows: Investment: Item As at 31 December 2020 Additions Additions from revaluation surplus (Note 2h) Disposals from revaluation surplus (Note 2h) Disposals As at 31 December 2021 Additions Additions from revaluation surplus (Note 2h) Disposals As at 31 December 2022 Passive infrastructure Automotive equipment Other equipment Construction in process Land Total 46 46 Ps. 73,446,416 Ps. 20,206,626 14,797 9,666 Ps. 79,859 29,854 Ps. 220,432 1,145,040 Ps. 47,101 3,440 Ps. 73,808,605 21,394,626 2,370,360 2,370,360 (4,613,610) (4,613,610) (2,810,318) (854,815) (3,665,133) 88,599,474 4,132,302 24,463 1,974 109,713 7,733 510,657 1,312,263 50,541 3,495 89,294,848 5,457,767 5,106,684 5,106,684 Ps. 97,838,460 Ps. 26,437 Ps. 117,446 Ps. (1,431,943) 390,977 (1,431,943) Ps. 54,036 Ps. 98,427,356#47OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Item Depreciation: As at 31 December 2020 Depreciation expense Disposals As at 31 December 2021 Depreciation expense Disposals As at 31 December 2022 Asset retirement obligation: As at 31 December 2020 Cancellations Amortization Increase for the year As at 31 December 2021 Cancellations Amortization Increase for the year As at 31 December 2022 Carrying amount: As at 31 December 2022 As at 31 December 2021 Passive infrastructure Automotive equipment Other Construction in equipment process Land Total Ps. (13,659,778) Ps. (3,402,087) (9,761) Ps. (23,762) Ps. Ps. (5,759) (15,175) (17,061,865) (3,823,016) (15,520) (38,937) Ps. (13,693,301) (3,423,021) (17,116,322) (2,484) (57,488) (3,882,987) Ps. (20,884,881) Ps. (18,004) Ps. (96,425) Ps. Ps. Ps. (20,999,309) Ps. 476,645 Ps. Ps. (25,551) 44,501 495,595 (26,326) 119,104 Ps. 588,372 Ps. Ps. 47 47 Ps. Ps. Ps. 476,645 (25,551) 44,501 Ps. 495,595 (26,326) 119,104 Ps. Ps. Ps. 588,373 Ps. 77,541,952 Ps. Ps. 72,033,204 Ps. 8,433 8,943 Ps. Ps. 21,021 70,776 Ps. Ps. 390,977 510,657 Ps. Ps. 54,036 Ps. 78,016,420 50,541 Ps. 72,674,121 Depreciation expense of property and equipment and amortization expense of licenses and software for the years ended 31 December 2022 and 2021 was Ps. 3,882,987 and Ps. 3,425,212, respectively. 9. ASSET RETIREMENT OBLIGATION An analysis of the Company's asset retirement obligation as at 31 December 2022 and 2021 is as follows: 2022 2021 Utilized Balance as at 1 January Increase for additions of passive infrastructure Redemptions Balance as at 31 December Ps. 1,056,581 145,430 (26,326) Ps. 1,012,080 50,979 (6,478) Ps. 1,175,685 Ps. 1,056,581 As at 31 December 2022, the review of the cash flow estimates and discount rates determined no changes in these variables compared to the prior year.#48OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 10. SHORT- AND LONG-TERM DEBT a) Analysis of long-term debt Breakdown of debt Bank loans 2022 Long term Ps. Ps. 2021 542,166 (286) Amortized cost Issue of structured notes ("certificados bursátiles") Amortized cost Long term Total long-term debt b) Analysis of short-term debt and interest Breakdown of debt Bank loans Bank loan Bank of America 19,785,918 (23,133) 19,762,785 Ps. 19,762,785 Ps. 541,880 19,071,751 (27,065) 19,044,686 19,586,566 2022 2021 Short term Ps. Ps. 450,000 Short term 458,700 Ps. 458,700 Ps. 450,000 Breakdown of debt 2022 2021 Interest payable on structured notes ("certificados bursátiles") Short term Ps. 547,257 Ps. 529,096 Interest payable on bank loans Interest payable on bank loans - Bank of America Short term Short term 258 1,785 2,744 Total interest payable 549,042 532,098 Total short-term debt and interest Ps. 1,007,742 Ps. 982,098 c) Issue of structured notes On 17 July 2015, as part of its structured note placement program through Inversora Bursátil, S.A. de C.V., Casa de Bolsa Grupo Financiero Inbursa (Inversora), Opsimex was authorized to issue five-year structured notes ("certificados bursátiles") of up to Ps. 22,000,000 or its equivalent in UDIs (investment units). Opsimex issued the following structured notes under this program: i) On 5 August 2015, Opsimex issued series 1 OSM-15 Mexican peso structured notes for a total issue of Ps. 3,500,000, and with a maturity date of 23 July 2025. These structured notes bear annual gross interest of 7.97%. ii) On 23 September 2015, Opsimex reissued its series 1 OSM-15R Mexican peso structured notes for a total issue of Ps. 3,710,000, and with a maturity date of 23 July 2025. These structured notes bear annual gross interest of 7.97%. iii) On 5 August 2015, Opsimex issued series 2 OSM-152 Mexican peso structured notes for a total issue of Ps. 4,500,000, and with a maturity date of 29 July 2021. These structured notes bear annual gross interest of 0.5% + 28-day Mexican Weighted Interbank Interest Rate (TIIE). As at 31 December 2021, Opsimex repaid these structured notes in full on 29 July 2021. 48#49OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 49 49 iv) On 5 August 2015, Opsimex issued series 3 OSM-15U structured notes denominated in UDIS for a total issue of Ps. 7,000,000 (equal to 1,324,169 UDIS), and with a maturity date of 17 July 2030. These structured notes bear annual gross interest of 4.75%. v) On 18 February 2016, Opsimex reissued its series 1 OSM-15 2R Mexican peso structured notes for a total issue of Ps. 2,500,000, and with a maturity date of 23 July 2025. These structured notes bear annual gross interest of 7.97%. vi) On 27 July 2021, Opsimex issued series OSM-0120 Mexican peso structured notes for a total issue of Ps. 1,000,000, and with a maturity date of 26 January 2021. These structured notes bear annual interest of 6.70%. As at 31 December 2021, Opsimex repaid these structured notes in full on 26 January 2021. vii) On 27 July 2021, Opsimex issued series OSM-0220 Mexican peso structured notes for a total issue of Ps. 2,000,000, and with a maturity date of 27 July 2021. These structured notes bear annual interest of 6.70%. As at 31 December 2021, Opsimex repaid these structured notes in full on 27 July 2021. An analysis of the historical amounts and the outstanding accrued interest under the long-term structured notes as at 31 December 2022 is as follows: Series Interest OSM-15 Mexican pesos series 1 OSM-15R Mexican pesos series 1 OSM-15 2R Mexican pesos series 1 OSM-15U UDIS series 3 Maturity date 23 July 2025 23 July 2025 Long-term debt payable Ps. 3,500,000 Ps. 121,653 3,710,000 128,952 23 July 2025 2,500,000 86,895 17 July 2030 10,075,918 209,757 Ps. 19,785,918 Ps. 547,257 An analysis of the historical amounts and the outstanding accrued interest under the long-term structured notes of Opsimex as at 31 December 2021 is as follows: Interest Series OSM-15 Mexican pesos series 1 OSM-15R Mexican pesos series 1 Maturity date Long-term debt payable 23 July 2025 Ps. 3,500,000 Ps. 120,878 23 July 2025 3,710,000 128,131 OSM-15 2R Mexican pesos series 1 OSM-15U UDIS series 3 23 July 2025 2,500,000 86,342 17 July 2030 9,361,751 193,745 Ps. 19,071,751 Ps. 529,096 As at 31 December 2022 and 2021, the value of one UDI was $7.6468 pesos and $ 7.1082 pesos, respectively. As at 25 April 2023, the date of issue of these consolidated financial statements, the value of the UDI was $ 7.7879 pesos. Redemptions The Series 1 (OSM-15, OSM-15R, OSM-15 2R) Mexican peso structured notes and Series 3 (OSM-15U) structured notes in UDIS of Opsimex do not stipulate early redemptions during their lifetimes, and principal is repayable to noteholders at maturity.#50OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES d) Bank loans An analysis of the Company's short-term bank loans as at 31 December 2022 is as follows: Currency Mexican pesos: Item Bank of America, N.A. ( Bank of America, N.A. (ii) Total debt Short-term Rate 4.52% 4.52% Maturity date debt Interest payable 23 February 2023 23 February 2023 Ps. Ps. 409,898 48,802 458,700 Ps. 1,595 Ps. 190 1,785 An analysis of the Company's long-term bank loans as at 31 December 2021 is as follows: Currency Mexican pesos: Item Bank of America, N.A. ( Bank of America, N.A. (ii) Total debt Rate 4.52% 4.52% Maturity date Short-term debt Interest payable 23 February 2023 23 February 2023 Ps. 490,732 Ps. 2,468 51,148 277 Ps. 541,880 Ps. 2,744 (i) (ii) On 23 February 2018, the Company renewed its line of credit of USD 24,000 with Bank of America (BOFA). This loan matures on 23 February 2023 and bears interest on outstanding balances at a rate of 4.52%. As at 31 December 2022 and 2021, the outstanding balance of this loan is Ps. 409,898 and Ps. 490,732, respectively, and interest payable on the loan is Ps. 1,595 and Ps. 2,468, respectively. On 22 February 2023, the Company repaid USD 3,000. On 24 May 2018, the Company renewed its line of credit of USD 2,500 with BOFA. This loan matures on 23 February 2023 and bears interest on outstanding balances at a rate of 4.52%. As at 31 December 2022 and 2021, the outstanding balance of this loan is Ps. 48,802 and Ps. 51,148, respectively, and interest payable on the loan is Ps. 190 and Ps. 277, respectively. An analysis of the Company's short-term bank loans as at 31 December 2022 and 2021 is as follows: Currency Mexican pesos: Item Banco Santander, S.A. Banco Inbursa, S.A. (ii) Total debt 28-day TIIE + basis points Interest Maturity date Long-term debt payable 6.36% 6.51% 26 January 2022 26 April 2022 Ps. 350,000 100,000 Ps. 186 72 Ps. 450,000 Ps. 258 (i) (ii) On 8 January 2021, the Company entered into a 12-month current account loan agreement in Mexican pesos with Banco Santander, S.A. Institución de Banca Múltiple for financing of up to Ps. 500,000. The loan bears interest on the outstanding balance at the 28-day TIIE + 6 basis points. On 28 October 2021, the Company drew down Ps. 100,000 from this line of credit. This drawdown matured in one month and was repaid in full on 26 November 2021. On 28 December 2021, the Company drew down Ps. 350,000 from this line of credit. This drawdown matures in one month and bears interest at the 28-day TIIE + 6 basis points. As at 31 December 2021, the outstanding balance of this loan is Ps. 350,000 and accrued interest payable on the loan is Ps. 186. As at 31 December 2022, the Company repaid the loan in full. On 28 October 2021, the Company entered into a current account loan agreement in Mexican pesos with Banco Inbursa, S.A. Institución de Banca Múltiple for financing of up to Ps. 100,000. This loan matures on 26 April 2022 and bears interest on the outstanding balance at the 28-day TIIE + 8 basis points. As at 31 December 2021, the outstanding balance of this loan is Ps. 100,000 and accrued interest payable on the loan is Ps. 72. As at 31 December 2022, the Company repaid the loan in full. 50#51OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 11. FINANCIAL ASSETS AND FINANCIAL LIABILITIES An analysis of the Company's financial assets and financial liabilities as at 31 December 2022 and 2021 is as follows: Long-term debt 2022 Carrying amount Ps. 19,762,785 Fair value Ps. 18,795,983,979 2021 Carrying amount Ps. 19,586,566 Fair value Ps. 19,200,241 The fair value of the Company's financial assets and liabilities is determined based on the price at which a financial instrument can be traded in an orderly transaction between market participants, without being a forced sale or liquidation. Management assessed that the fair values of cash and cash equivalents, trade receivables, trade payables and accrued liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments. 12. LEASES The Company has lease contracts for various items of property, motor vehicles and offices used in its operations. Leases of properties generally have lease terms between 5 and 12 years, while motor vehicles and offices generally have lease terms between 1 and 4 years. The Company's obligations under its leases are secured by the lessor's title to the leased assets. Set out below are the carrying amounts of right-of-use assets recognized and the movements during the period: Leased properties Other leases Total As at 31 December 2021 Additions and reclassifications Depreciation As at 31 December 2021 Additions and reclassifications Depreciation Ps. 11,941,028 6,825,494 Ps. (1,661,284) 1,590 19,955 710 Ps. 11,942,618 6,845,449 (1,660,574) 17,105,238 22,255 17,127,493 4,431,224 (2,160,997) As at 31 December 2022 Ps. 19,375,465 Ps. 6,081 (11,025) 17,311 4,437,305 (2,172,022) Ps. 19,392,776 Set out below are the carrying amounts of lease liabilities recognized and the movements during the period: As at 1 January 2021 Additions Accretion of interest Lease payments As at 31 December 2022 2022 2021 Ps. 18,262,010 Ps. 12,555,935 4,437,305 6,845,449 1,832,264 1,416,680 (2,964,179) (2,556,054) Ps. 21,567,400 Ps. 18,262,010 51#52OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES The following are the amounts recognized in profit or loss: Depreciation of right-of-use assets Lease interest Total amount recognized in the statement of comprehensive income 13. RETIREMENT BENEFITS 2022 2021 Ps. 2,172,022 1,832,264 Ps. 1,660,574 1,416,680 Ps. 4,004,286 Ps. 3,077,254 An analysis of the net periodic benefit expense and the defined benefit obligation associated with the Company's post-employment benefits (seniority premiums and termination benefit plan) as at and for the years ended 31 December 2022 and 2021 is as follows: a) Net periodic benefit expense Analysis of net periodic benefit expense for 2022: Current-year service cost Interest cost Net periodic benefit expense Analysis of net periodic benefit expense for 2021: Current-year service cost Interest cost Net periodic benefit expense Retirement benefits 2022 Termination benefits Total Ps. 812 Ps. 473 Ps. 1,285 548 605 1,153 Ps. 1,360 Ps. 1,078 Ps. 2,438 Retirement benefits 2021 Termination benefits Total Ps. 666 Ps. 614 Ps. 1,280 620 451 1,070 Ps. 1,286 Ps. 1,064 Ps. 2,350 52 52#53OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES b) An analysis of changes in the Company's net defined benefit obligation is as follows: Net defined benefit obligation: Net defined benefit obligation as at 31 December 2020 Remeasurements for the year Current-year service cost Interest cost Charges to the reserve Actuarial gain Net defined benefit obligation as at 31 December 2021 Remeasurements for the year Current-year service cost Interest cost Charges to the reserve Actuarial gain Net defined benefit obligation as at 31 December 2022 c) An analysis of the net defined benefit obligation is as follows: Provisions for: Vested benefit obligation Net defined benefit obligation Ps. Retirement benefits Termination benefits Total 7,158 615 Ps. 3,480 Ps. 327 10,638 942 566 427 993 (354) (354) (641) 1,803 1,162 7,698 5,683 13,381 (192) 923 731 (551) (551) (799) (822) (1,624) Ps. 6,707 Ps. 5,233 Ps. 11,937 Retirement benefits 2022 Termination benefits Total Ps. 6,707 Ps. 5,230 Ps. Ps. 6,707 Ps. 5,230 Ps. 11,937 11,937 Retirement benefits 2021 Termination benefits Total Provisions for: Vested benefit obligation Ps. 7,698 Ps. 5,682 Ps. 13,380 Net defined benefit obligation Ps. 7,698 Ps. 5,682 Ps. 13,380 53 53#54OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES d) The key assumptions used in the actuarial study, expressed in absolute terms, were as follows: 2022 2021 Financial assumptions Discount rate Expected salary increase rate Inflation rate Biometric assumptions Mortality rate Disability rate As at 31 December 2022 and 2021, the Company does not have any material contingent liabilities for employee benefits. 14. EMPLOYEE BENEFITS 10.07% 8.05% 7.50% 7.00% 3.75% 3.50% EMSSA 2009 Dynamic IMSS 97 EMSSA 2009 Dynamic IMSS 97 As at 31 December 2022 and 2021, the Company has recognized accrued liabilities for short-term employee benefits. An analysis is as follows: Paid annual leave Vacation premium Bonuses Employee profit sharing 54 54 As at As at 31 December 2020 Arising during the year 31 December Utilized 2021 Arising during the year Utilized As at 31 December 2022 Ps. 2,117 Ps. 3,822 4,484 4,431 Ps. (3,464) Ps. 3,137 Ps. 4,019 Ps. (4,317) Ps. 2,839 (6,026) 2,227 8,312 (5,638) 4,901 13,276 13,100 (15,129) 11,247 19,617 (12,694) 18,170 2,201 27,233 Ps. 21,416 Ps. 49,248 Ps. (2,201) (26,820) Ps. 27,233 43,844 Ps. 18,127 50,075 (21,110) 24,250 Ps. (43,759) Ps. 50,160 15. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES An analysis of accounts payable and accrued liabilities is as follows: 2022 2021 Suppliers and accounts payable Ps. Provisions and accrued liabilities Total 107,305 61,836 Ps. 142,403 89,264 Ps. 169,141 Ps. 231,667 The above-mentioned provisions represent expenses incurred in 2022 and 2021 or services contracted during these years that are to be paid in the following year. There is uncertainty as to both the final amounts payable and the timing of the Company's cash outlay and thus, the amounts shown above may vary.#55OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 16. EQUITY a) An analysis of the Company's share capital as at 31 December 2022 and 2021 is as follows: Series A B A-1 Share capital Minimum, fixed Minimum, fixed Minimum, variable No. of shares 3,300,000 3,300,000 2022 2021 Amount No. of shares Ps. 50,000 35,124,997 Ps. 23,733 23,733 35,174,997 Amount Ps. 50 9,950 Ps. 10,000 b) The Company's share capital is variable, with an authorized fixed minimum of Ps. 23,733, represented by 3,300,000 series "A-1" common registered shares, issued and outstanding, with no par value. These shares are registered on the National Securities Registry under file number 3495-1-2022-1 and listed on the stock exchange under ticker symbol SITES1. c) As at 31 December 2022, the Company had treasury shares comprised of 62,483,000 Series A-1 shares for subsequent reissuance as set forth in the Mexican Securities Trading Act. d) In accordance with the Mexican Corporations Act, the Company is required to appropriate at least 5% of the net profit of each year to increase the legal reserve. This practice must be continued each year until the legal reserve reaches 20% of the value of the Company's share capital. The legal reserve is included as part of Retained earnings. As at 31 December 2022 and 2021, the legal reserve is Ps. 3,359. e) Earnings distributed in excess of the Net taxed profits account (CUFIN, by its acronym in Spanish) balance will be subject to the payment of corporate income tax at the statutory rate at that time. The payment of this tax may be credited against the Company's current income tax. f) As a result of the 2014 Mexican Tax Reform, dividends paid to individuals and foreign corporations from earnings generated as of 1 January 2014 shall be subject to an additional 10% withholding tax. g) Through resolutions adopted at a regular shareholders' meeting held on 26 January 2022, the shareholders declared a cash dividend of Ps. 100,320. This dividend was paid out from the CUFIN account on 27 January 2022. h) Through resolutions adopted at a regular shareholders' meeting held on 18 February 2022, the shareholders declared a cash dividend of Ps. 100,320. This dividend was paid out from the CUFIN account on 21 February 2022. i) Through resolutions adopted at a regular shareholders' meeting held on 31 March 2022, the shareholders authorized a program for the purchase and issuance of shares representing the Company's share capital, as provided for in Article 60 of the General Rules Applicable to Securities Issuers, in accordance with Article 56 of the Mexican Securities Trading Act, for a total amount of Ps. 2,500,000. j) Through resolutions adopted at a regular shareholders' meeting held on 29 April 2022, the shareholders declared a cash dividend of $0.48 per issued and outstanding share representing the Company's share capital. The amount of the dividend to be paid will depend on the repurchase or reissue of the Company's own shares. This dividend was paid out on 30 May 2022. 55#56OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES 17. INCOME TAX On 30 October 2020, the Mexican Congress approved the 2021 Tax Reform, which became effective on January 1st 2021. Among other changes, the reform establishes a net interest expense deduction limitation equal to 30% of an entity's adjusted tax profit. This limitation is only applicable when the amount of the aggregate interest payments of the members of a corporate group in Mexico exceeds 20 million Mexican pesos. The 2021 Tax Reform had no effect on the Company's consolidated financial statements. a) The Mexican Income Tax Law (MITL) establishes a corporate income tax rate of 30% for fiscal years 2022 and 2021. b) An analysis of income tax recognized in profit or loss for the years ended 31 December 2022 and 2021 is as follows: Current income tax Deferred income tax Total income tax c) A reconciliation of the Company's net deferred income tax assets and liabilities is as follows: 2022 2021 Ps. Ps. 901,521 (250,483) 651,038 Ps. 663,643 Ps. (439,100) 224,543 2022 2021 As at 1 January Ps. Deferred income tax recognized in profit or loss Deferred income tax in other comprehensive income Deferred income tax reclassified to retained earnings (4,267,059) 250,483 (6,245) Ps. (6,191,456) 439,100 (716,392) 2,201,689 As at 31 December Ps. (4,022,821) Ps. (4,267,059) d) A reconciliation of the statutory income tax rate to the effective income tax rate recognized by the Company for financial reporting purposes is as follows: 2022 30% 2021 30% Statutory income tax rate Effect of reconciling items: Taxable effects of inflation Property and equipment, net Non-deductible items Provisions Reversal of provisions Leases Share of profit/(loss) of trust Effective income tax rate 55 99 (30) (52) 1 1 2 3 18 12 3 (40) 82% 50% 99 56#57OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES An analysis of the effects of temporary differences giving rise to deferred tax assets and liabilities is as follows: 2022 2021 Deferred tax assets: Provisions and accrued liabilities Interest pursuant to Article 28.XXXII Employee benefits Retirement benefits Total deferred tax assets Deferred tax liabilities: Property and equipment, net Surplus on revaluation of assets Amortized cost Prepaid expenses Total deferred tax liabilities Deferred tax liability, net Ps. 18,724 Ps. 34,892 5,269 7,676 14,101 3,581 29,981 4,014 17,163 4,029,691 761 5,187 Ps. 4,052,802 (4,022,821) 58,276 57,089 4,265,045 395 2,806 4,325,335 Ps. (4,267,059) f) For the years ended 31 December 2022 and 2021, the Company reported taxable profit of Ps. 3,005,068 and Ps. 2,212,143, respectively, on which income tax payable was Ps. 901,520 and Ps. 663,643, respectively. As at 31 December 2022 and 2021, the Company has the following tax balances: Restated contributed capital account (CUCA) Ps. 2022 29,329 21,209,264 2021 Ps. 13,505 18,958,239 Net taxed profits account (CUFIN) h) FIBRA real estate tax regime The Trust is subject to the tax treatment set forth in the Tax Provisions related to FIBRAS (FIBRA Tax Regime) applicable to trusts engaged in the acquisition or construction of property and must comply with the requirements established in the related provisions. The Trust and its Noteholders must fulfill the tax obligations arising from the Trust's activities in accordance with the FIBRA Tax Regime. The Trust is not subject to the payment of income tax; however, it is required to calculate its taxable profit in terms of the Tax Provisions regarding FIBRAS, and distribute at least 95% of its annual taxable profit to its noteholders. For the years ended 31 December 2022 and 2021, the Trust determined taxable profit of Ps. 1,497,707 and Ps. 322,973, respectively, in accordance with the Tax Regime for FIBRAS. 57#58OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Pursuant to Articles 187 and 188 of the MITL, Rules 3.21.2.2. and 3.21.2.3. of the 2022 Miscellaneous Tax Resolution and other applicable tax laws, the Trust must comply with certain requirements, which include the following: a) The Trust is primarily engaged in the acquisition or construction of real estate intended to be leased, or to acquire the right to receive income from the leasing of such real estate. b) At least 70% of the Trust's net assets must be invested in real estate, while the remainder must be invested in government securities registered with the National Securities Registry, or in mutual funds. The real estate built or acquired is intended for leasing and cannot be sold unless at least four years as of the date of completion of construction or acquisition thereof have elapsed, respectively. The real estate sold before such period has elapsed shall not be subject to the preferential tax treatment established in Article 188 of the MITL. d) The Trustee must issue equity certificates for the Trust's net assets, and such certificates must be placed in Mexico among the general investing public. e) The Trustee must distribute, at least once a year and no later than 15 March, at least 95% of its taxable profit from the immediately prior year generated from the Trust's net assets to all noteholders. f) Mobile telecommunications towers must be intended exclusively for commercial exploitation through service agreements for shared access and use of the infrastructure to be used, operated and exploited as a location for active and passive infrastructure. In terms of Rule 3.21.3.5., the value of mobile telecommunications towers that are an integral part of the Trust's net assets is to be determined using the procedure established to restate the acquisition cost of the real estate referred to in Article 124 of the MITL, except when the real estate where the towers are built is also part of the Trust's net assets, in which case the value of the towers is to be determined as part of the construction cost of such property. In accordance with Article 187 of the MITL, the Trust will be also subject to the provisions of Article 188 of the MITL, as follows: a) In terms of Title II of the Law, the Trustee shall determine the Trust's taxable profit for the year on revenue earned from property, rights, loans or securities that are an integral part of the Trust's net assets. b) Taxable profit for the year shall be divided by the number of equity certificates issued by the Trustee to the Trust in order to determine the amount of taxable profit corresponding to each individual certificate. c) The Trustee must withhold from the holders of the equity certificates income tax on the distributed amount of such tax result, applying the rate set forth in Article 9 of the Law, unless the noteholders are exempt from the payment of income tax on such income. d) The holders of the equity certificates shall be subject to the payment of income tax on income earned from the sale of such certificates. e) Whenever the trustors contribute real estate to the Trust that will be immediately leased to such trustors by the trustee, the trustors may defer payment of income tax payable on income earned from the sale of the property until the date on which the lease agreement is terminated, provided that such period does not exceed 10 years, or at the time the trustee sells the contributed real estate, whichever occurs first. 58#59OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES Dignified vacation reform The vacation reform published in the Official Gazette on 27 December 2022 and effective as of January 1st 2023 amends Articles 76 and 78 of the Federal Labor Law, which address vacation periods. Workers who have more than one year of service are now entitled to 12 paid vacation days per year, increasing by two days for each additional year of service until the fifth year (20 days). As of the sixth year, the number of vacation days granted to employees will increase by two days for each additional five years of service. Each employee may use such vacation days as they prefer, upon agreement with their employer. Article 78 was amended to indicate that, of the total vacation period provided for in Article 76, the worker shall be entitled to at least twelve continuous days. As at 31 December 2022, the Company recognized an increase in the provision for paid annual leave in its financial statements. Labor outsourcing reform In April 2021, the Mexican government amended the Federal Labor Law, the Federal Tax Code and other laws that regulate employment in order to prohibit the outsourcing of employees, except under specific circumstances. Derived from this tax reform, entities are not allowed to deduct outsourcing expenses or credit their input value added tax on outsourcing expenses. In a worst-case scenario, labor outsourcing may be considered as tax fraud. This reform became effective on September 1st 2021. As a result of the labor outsourcing reform, the Company transferred employees between Group companies, along with all labor obligations related to past services provided. The labor outsourcing reform had no effect on the Company's consolidated financial statements. Employee profit sharing As a result of the labor outsourcing reform, in 2021 the method used to calculate employee profit sharing was modified. New requirements were established, whereby the employee profit sharing payable to each employee is capped at three times their current monthly wage or the average employee profit sharing received by the employee in the three prior years (assigned employee profit sharing), whichever is higher. If the amount of employee profit sharing determined by applying the 10% rate to taxable profit is higher than the sum of the employee profit sharing allocated to each employee, the latter must be considered as the amount of employee profit sharing payable for the period. In accordance with the Mexican Labor Law, the difference between these two amounts does not generate a payment obligation either in the current or future periods. If current employee profit sharing calculated using a 10% rate of an entity's taxable profit is equal to or less than the amount of the employee profit sharing assigned to each employee, the former shall be considered as the current employee profit sharing for the period. 18. CONTINGENCIES AND COMMITMENTS Since 2013, the Mexican government has been formulating a new regulatory framework for the country's telecommunications and the broadcast sectors. This new regulatory framework is based on a set of constitutional reforms that were enacted in June 2013, which took effect in July 2014, and which led to the enactment of a new Federal Telecommunications and Broadcasting Law and Mexican Public Broadcasting System Law to replace the existing regulatory framework. As a result, the Federal Telecommunications Institute (IFT) was created as an independent agency tasked with promoting and regulating access to Mexico's telecommunications and broadcast infrastructure (including passive infrastructure). The IFT also has the power to oversee fair competition in the telecommunications and broadcast sectors by imposing asymmetric regulations on sector participants that it deems market dominant and it may also declare that a company is a so-called "preponderant economic agent" in either of these two sectors. In March 2014, the IFT issued a ruling (the Ruling) through which it declared that America Móvil and Telcel, together with other market participants, represented an "economic interest group" that is a so-called "preponderant economic agent" in the telecommunications sector. The IFT ordered America Móvil and Telcel to take specific actions to force both companies to grant access to and to share their passive infrastructure with other carriers. The Company's and the Trust's passive infrastructure includes non-electronic components used in telecommunications networks, including but not limited to rights of way, ducts, masts, ditches, towers, posts, equipment installations and related supplies, security, auxiliary equipment, land, physical space and pipes. 59#60OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES The Federal Telecommunications and Broadcasting Law that was published in July 2014 states that the IFT shall be tasked with promoting the execution of agreements between asset owners and customers in order for the former to provide access to this passive infrastructure to the latter. Whenever the negotiations surrounding these agreements prove unsuccessful, the IFT may intercede to determine the pricing and the terms of the commercial agreements. The IFT also has the power to regulate the terms of passive infrastructure agreements between assets owners and their customers, and it may assess the agreements in terms of fair competition and take actions to ensure that the terms and conditions for the use and sharing of the passive infrastructure are non-discriminatory. In February 2017, the IFT issued a Biennial Ruling that amended, eliminated and supplemented the provisions stipulated in the original Ruling. Additionally, in December 2020, the IFT issued a second Biennial Ruling, whereby the IFT's plenary session amended, eliminated and supplemented the measures imposed on the so-called preponderant economic agent in the telecommunications sector. The amendments applicable to passive infrastructure have been deemed immaterial. Merger At the date of issue of these merged financial statements and with regard to the disappearing entity, the Company is in the process of obtaining acceptance from the tax authority of the processing form for the notice of cancellation of the Federal Taxpayer Registry (RFC, by its acronym in Spanish) due to merger. In this regard, and in accordance with the procedure in force, it shall be deemed to be complete when the Company has filed the cancellation of the RFC of the disappearing entities mentioned in the preceding paragraph, as set out in Article 24 Section I of said code, Rule 2.5.25 of the Miscellaneous Tax Resolution and processing forms "86/CFF Notice of cancellation in the RFC due to merger" and "316/CFF Review prior to the filing of the notice of cancellation in the RFC". Therefore, if the procedure for the cancellation of the RFC of the disappearing companies is not completed, the tax authorities could consider the merger as a disposal for tax purposes, with the relevant implications established in the MITL, Value Added Tax Law and other applicable laws. Reference offer In accordance with the Ruling as amended by the Biennial Ruling and in terms of the new regulatory framework, Telcel has drafted and/or updated its reference offer, which will be valid until 31 December of each year. As a result, Opsimex, as the transferee of Telcel and owner of the passive infrastructure, has complied with the terms of the Ruling. In the terms of the Biennial Ruling, there is an offer currently in effect, which was duly approved by the IFT in November 2022 and will be valid from January 1st to 31 December 2023. As per the terms of the reference offer, carriers must sign both a general agreement and an individual agreement for each site they acquire access to for a minimum of ten years. According to the Biennial Ruling, in July of each year the Company will be required to file a new reference offer for approval by the IFT. These new reference offers shall take effect on January 1st of the following year, although operators may agree on reference offers with longer terms than their current reference offers. Towers and Antennas The Company is subject to regulatory requirements regarding the registration, zoning, construction, lighting, demarcation, maintenance and inspection of towers, as well as land-use restrictions for the land on which the Company's towers are located. Failure to comply with these regulations may lead to fines. The Company believes that it complies substantially with all applicable regulations. 60#61OPERADORA DE SITES MEXICANOS, S.A.B. DE C.V. AND SUBSIDIARIES The Company has passive infrastructure installed throughout Mexico and in various sites abroad. Its principal business segment is leasing this infrastructure. At the date of issue of these consolidated financial statements, the Company's business is geographically divided into the following regions: 19. SEGMENT INFORMATION 61 62 2022 Region Mexican states Infrastructure rental income Depreciation of right-of-use assets Depreciation of passive infrastructure Infrastructure 2021 Depreciation of right-of-use Depreciation of rental income assets passive infrastructure 1 2 Baja California Sur and Baja California. Sinaloa and Sonora Ps. 459,909 Ps. 122,171 Ps. 172,798 Ps. 399,685 Ps. 94,084 Ps. 155,464 691,448 135,521 278,623 587,573 127,863 228,148 3 Chihuahua and Durango 596,545 90,884 248,191 430,491 95,748 170,792 456 Nuevo León, Tamaulipas and Coahuila 1,204,026 210,514 424,878 1,023,973 211,693 337,692 Jalisco, Michoacán, Colima and Nayarit 1,310,664 240,922 512,433 1,071,156 231,614 395,739 Querétaro, Guanajuato, San Luis Potosí, Aguascalientes and Zacatecas 1,222,533 246,269 461,948 1,021,248 227,376 383,929 7 Puebla, Veracruz, Oaxaca and Guerrero 1,747,197 338,907 614,700 1,374,145 297,634 485,058 8 Yucatán, Campeche, Tabasco, Chiapas and Quintana Roo 1,254,683 227,363 429,769 9 Hidalgo, Morelos and Mexico City Total 1,932,746 Ps. 10,419,751 535,380 Ps. 2,147,931 653,755 Ps. 3,797,095 Ps. 968,774 1,687,277 8,564,322 226,323 314,367 122,681 904,356 Ps. 1,635,016 Ps. 3,375,545 Other foreign sites 1 Costa Rica Total foreign sites Total Ps. 125,575 125,575 Ps. Ps. 10,545,326 24,091 24,091 Ps. 2,172,022 Ps. Ps. 25,921 25,921 3,823,016 Ps. Ps. 124,187 124,187 8,688,509 Ps. Ps. 25,558 25,558 1,660,574 Ps. Ps. 26,542 26,542 3,402,087 20. SUBSEQUENT EVENTS i) The loan payable by Telesites Costa Rica to Bank Of America matured on 23 February 2023. On that same date, the parties to the loan agreement extended the maturity date through an extension letter, whereby they agreed to increase the interest rate to 5.60% and set the new maturity date at 2 March 2023. On March 1st 2023, amendment number 1 was signed under the unsecured term loan agreement, which ratifies the 5.6% interest rate and extends the loan term for 5 years as of the signing date. ii) In January 2023, the Company paid interest of Ps. 391,243 and Ps. 243,983 on its OSM-15 Mexican peso structured notes and OSM-15U UDI structured notes, respectively.#62LETTER FROM AT A GLANCE SOLID GROWTH EXECUTIVE COMMITTEE OPERATING SUMMARY CORPORATE GOVERNANCE AUDIT AND CORPORATE PRACTICES COMMITTEE FINANCIAL STATEMENTS CONTACT 62 INVESTOR INFORMATION telesites Investor Relations Mariana Carrillo Herrera [email protected] Stock information Series A1 shares of Operadora de Sites Mexicanos, S.A.B de C.V. are listed on the Mexican Stock Exchange under the ticker symbol "SITES1". Website https://www.telesites.com.mx Headquarters Av. Paseo de las Palmas No 781, 7th floor, Offices 703-704, Col. Lomas de Chapultepec III Sección postal code 11000 Miguel Hidalgo, Mexico City