Vodafone Essar, the country?s second largest GSM operator, has reported an operating profit for the first time since its operations in India at R110 crore (?15 million) for the year ended March 31, 2011. Last year its operating losses stood at R272.2 crore (?37 million). Vodafone started its operations in India four years ago when it acquired Hutchison Telecommunications’ 67% stake in the Indian firm Hutch-Essar.

Vodafone?s revenues for the year increased 16.2% on account of increased mobile customer base and a more stable pricing environment towards the end of the year. For the year ended March 31, 2011, its revenues increased to R28,368.9 crore (?3.85 billion) compared to R22,915.9 crore (?3.11 billion) for the year ended March 31, 2010.

?Service revenue grew by 16.2% including a 1.7% benefit from Indus Towers, the group?s telecom tower joint venture with Bharti Airtel and Idea Cellular. Growth was driven by a 39% increase in the average mobile customer base and stable usage per customer trends, partially offset by a fall in the effective rate per minute due to an increase in the penetration of lower priced tariffs into the customer base and strong competition in the market,? the company said in its financial statement. Vodafone added 10.3 million new subscribers during the quarter to reach 134.5 million subscriber base with an annualised churn of 50.9%. For the quarter, the company generated 1,19,295 million minutes on the network with a blended average revenue per user (Arpu) of R171.

Its pre-paid subscriber base (which is 95.3% of its total base) has an Arpu of R142 and post-paid subscribers contribute an Arpu of Rs 728 per month. The company launched its 3G services in February 2011 following the purchase of 3G spectrum in May 2010 and subsequently rolling out the network. The company has so far roped in 1.5 million 3G customers.

Vodafone’s ongoing tussle with the country?s income tax authorities will come up for hearing in the Supreme Court on July 19, 2011. Vodafone believes that neither it nor any other member of the group is liable for such withholding tax, or is liable to be made an agent of Hutchison Telecommunications International Ltd (HTIL).

?However, the outcome of the proceedings remains uncertain and such proceedings may or may not dispose of the matter in its entirety and there can be no assurance that any outcome will be favourable to Vodafone or the Group,? the statement added.

On March 30, 2011, the Essar group exercised its underwritten put option over 22% of Vodafone Essar following which, on March 31, 2011, the group exercised its call option over the remaining 11% stake owned by the Essar group. The total consideration due under these two options is $5 billion and the deal is expected to be completed by November this year.