Vodafone 2013 Annual Report Download - page 19

Prospects for the 2014
nancial year5
Entering the new nancial year, we continue
to face stiff headwinds from regulation,
competition and a tough economic
environment, particularly in Europe.
However, we are well positioned, with broad
geographic exposure which includes attractive
growth markets in India, Africa and the US,
and a differentiated enterprise franchise.
We benet from a strong balance sheet and
will continue our major focus on shareholder
remuneration, while consistently
reinvesting in our network to enhance the
customer experience.
Regulation remains a key concern for us and
the industry. Again we face the signicant
hurdle of MTR cuts, which we expect
to create a drag of over two percentage
points on service revenue. However, this
effect should reduce substantially in the 2015
nancial year based on current regulatory
glide paths. We also await clarity on EU bre
regulation, where we are supportive of the
pro-investment stance, subject to equality
of access and margin squeeze provisions
which are enforceable at the country level.
We expect adjusted operating prot for
the 2014 nancial year to be in the range
of £12.0 billion to £12.8 billion.
We expect free cash ow to be around
£7.0 billion, including the £2.1 billion VZW
dividend due in June 2013. We expect capital
expenditure, to remain broadly steady
on a constant currency basis.
We expect the Group EBITDA margin,
excluding M&A and restructuring costs,
to decline slightly year-on-year, reecting the
ongoing weak macroeconomic environment
in Europe.
Vittorio Colao
Chief Executive
10m
customers are expected to be using
Vodafone Red plans by March 2014.
Operations 2015
Over the next three years we plan to simplify
further our business model both across and
within countries, eliminating legacy structures,
reducing non-customer-facing costs and
moving towards more standardised offerings.
This will enable us to maximise the benets
of our scale and share commercial, technical
and support functions across geographies
in Europe, and to speed up and co-ordinate
our time to market for new propositions and
services. We see a signicant opportunity
in unifying network and IT management across
multiple markets, in further centralising and
standardising procurement, and in offshoring
more business functions to shared service
centres of expertise. We are targeting
an absolute reduction in European4 operating
expenses from these and other programmes
of £0.3 billion in the 2014 nancial year.
Our Vodafone 2015 strategy
Consumer 2015
A new strategic approach to consumer pricing and bundling in Europe, in order to offer customers greater
freedom of usage and, at the same time stabilise ARPU.
We are aiming to increase the number of Vodafone Red customers to ten million by March 2014.
Enterprise 2015
We are strengthening our position in enterprise, enhancing our product offering to large and
medium-sized businesses and creating a dedicated enterprise operational structure.
Our 2015 enterprise strategy is based on six pillars: accelerating our converged offers; consolidating our
lead in M2M; growing Vodafone Global Enterprise and our Carrier Services business; leveraging our hosting
capability; and offering cloud-based software as a service.
Network 2015
We are focused on supporting high speed data services and delivering a consistently excellent
data experience.
We aim to extend our 3G footprint at 43.2 Mbps and LTE coverage across ve major European markets
to 80% and 40% respectively by 2015.
Operations 2015
We aim to further simplify our business model both across and within countries.
We are targeting a £0.3 billion reduction in European operating expenses in the 2014 nancial year.
Notes:
1 £442 million from current programme and £1,126 million from
previousprogramme.
2 Based on 2013 guidance foreign exchange rates.
3 At 12 May 2013.
4 Northern and Central Europe, Southern Europe and Common
Functions, excluding restructuring costs.
5 See guidance on page 45.
17 Vodafone Group Plc
Annual Report 2013
Overview Business
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