NEW DELHI, INDIA India's No. 2 mobile operator Reliance Communications reported an unexpected rise of nearly 8.3 per cent in consolidated quarterly net profit, aided by higher interest income, but falling average user revenue remained a worry.

Reliance Communications, predominantly a CDMA operator, rode on a second network it built in January on the popular GSM platform, which helped it sign up a record 18.3 million mobile users during six months to June to have a total of 79.6 million, about 57 per cent higher than a year earlier.

But free voice minutes to lure new GSM subscribers at the beginning of the expansion were a cause of concern.

S.P. Shukla, head of wireless business at Reliance, reiterated in a conference call on Friday that new subscribers were going beyond the promotional free minutes. Shukla has earlier said from July everybody would be a paying customer.

The Mumbai-based firm, which trails market leader Bharti Airtel with 19 per cent of the market, said consolidated net profit rose to 1637 crore rupees ($340 million) in its fiscal first quarter ended June from 1512 crore a year earlier.

Revenue rose 15.5 per cent from a year earlier to 6145 crore rupees, the company said.

Analysts polled by Reuters on average expected net profit to fall to 13.37 billion rupees on revenue of 6241 crore.

Higher other income and income from investments helped boost the profit in June quarter.

But average revenue per user (ARPU), a key metric in mobile business, fell more than a quarter from a year earlier to 210 rupees in the June quarter as the company added more users from small towns and rural areas who talk less than urban users.

In the March quarter, the company posted its first fall in profit since it was listed in March 2006.

Bharti Airtel last week reported quarterly profit up 24 per cent.

Ahead of the results, shares in Reliance Communications closed 2.1 per cent lower, compared with a 1.8 per cent rise in the broader market.