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.
| 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 |