Vodafone 2008 Annual Report Download - page 9

As well as driving growth in our existing emerging market
assets, we will continue to explore further opportunities to
expand our emerging market footprint through selective
investments, with a particular focus on Africa and Asia.
Uniquely positioned to deliver growth
We believe that Vodafone is uniquely positioned to capitalise on
the evolving communications environment. Our portfolio of assets
provides the advantages of scale and exposure to attractive growth,
and leverages our strong customer franchise in both consumer
and business segments supported by a leading global brand.
We have a market leading position in mature, high cash flow
generating markets in Europe combined with an increasing
exposure to higher growth emerging markets in Eastern Europe,
Middle East, Africa and Asia, in particular in India. We also have
a material position in the attractive US market through our stake
in Verizon Wireless.
By expanding beyond our historic core mobile offerings to
deliver data and fixed broadband services through our total
communications strategy, this enables us to continue to be a
leader in the increasingly integrated communications industry
and therefore supports continued strong cash generation and
returns to shareholders.
Prospects for the year ahead
Operating conditions are expected to continue to be challenging
in Europe given the current economic environment and ongoing
pricing and regulatory pressures but with continued positive
trends in messaging and data revenue and voice usage growth.
We expect increasing market penetration to continue to result in
overall strong growth for the EMAPA region. Our geographically
diverse portfolio should provide some resilience in the current
economic environment. We also anticipate significant benefit
from recent changes in foreign exchange rates compared to
2008, particularly in respect of the euro, which we have assumed
to be on average at 1.30 to sterling for the year.
Our revenue expectations for the year ahead reflect our drive
for growth, particularly in respect of our total communications
strategy for data and fixed broadband services and in emerging
markets. Adjusted operating profit is therefore anticipated to
reflect a greater proportion of lower margin fixed broadband
services together with continued strong performance from
Verizon Wireless in the US.
Capital expenditure on fixed assets includes an increase in
investment in India to drive further strong growth. Capital
intensity is expected to be maintained at around 10% of
revenue for the total of our Europe region and common
functions, with continued investment in growth. Free cash flow
excludes spectrum and licence payments and is after taking
into account £0.3 billion from payments for capital expenditure
deferred from 2008.
Personal reflections
I have decided to retire as the Chief Executive of the Company
following the AGM on 29 July. It has been a privilege to lead
Vodafone over the last five years. We have made significant
progress, changing our strategy from mobile to total
communications, including broadband and the internet.
We have secured some important assets in markets including
Turkey and India, and we have integrated these acquired
businesses to build a global company. Our Board and
employees are aligned behind the strategic direction of
the business and the Company is well positioned to succeed
in the future. We have issued a strong set of 2008 annual
results in line with, or ahead of, guidance and the Company
has built strong momentum in executing its strategy. I have
accomplished what I set out to achieve on taking the role
as Chief Executive and therefore felt the time was right to
hand over responsibilities to a successor. I am delighted that
Vittorio Colao will be taking over as Chief Executive. He has
the knowledge and vision to drive the business towards
future success.
I believe Vodafone is well positioned to continue delivering
value to both customers and shareholders. I would like to
thank the Board for its support, insight and counsel in recent
years. I would also like to thank our 72,000 employees for
their ongoing customer focus and wish them every success
in the future.
Arun Sarin
Chief Executive
Outlook for 2009
(£bn) 2009 outlook 2008 actual
Revenue 39.8 to 40.7 35.5
Adjusted
operating profit 11.0 to 11.5 10.1
Capitalised fixed
asset additions 5.3 to 5.8 5.1
Free cash flow 5.1 to 5.6 5.5
Vodafone Group Plc Annual Report 2008 7