Reliance Comm, Vodafone unit boost India telecoms outlook

* Reliance Comm Q2 net more than doubles before one-off gain

* Vodafone India reports 13 pct revenue growth

* India telecoms market in recovery mode

By Devidutta Tripathy

NEW DELHI, Nov 12 (Reuters) - Higher call tariffs and reduced competition helped two of India's biggest telecom firms to boost quarterly results, underscoring the recovery in the world's second-biggest mobile phone market by subscribers.

Reliance Communications Ltd (BSE: RCOM.BO - news) , the market's fourth-largest carrier and controlled by billionaire Anil Ambani, smashed estimates with quarterly net profit more than doubling before a one-time gain.

Vodafone's unlisted Indian unit, the country's No.2 cellular operator, said it would increase investment in its mobile data networks, after reporting quarterly revenue rose 13.3 percent. Vodafone India also said the country's regulatory environment, which has been a major drag, was gradually improving.

"This time I can say that I am more positive about the environment than before," Marten Pieters, chief executive officer of Vodafone India, told a news conference on Tuesday. He said customers continued spending on telecoms services despite slower economic growth and high inflation.

India is home to the world's largest number of mobile phone subscribers after China, but the sector's profitability had been hammered by a price war, before starting to improve in the past two quarters.

Carriers such as Bharti Airtel Ltd, Vodafone India, Idea Cellular (BSE: IDEA.BO - news) and Reliance Communications were earlier this year able to raise tariffs for voice calls after a gap of two years, after a court revoked the permits of smaller rivals, forcing them to scale back or shutdown.

In a market where voice calls account for close 85 percent of revenue, the next battleground between carriers is likely to be in the high-margin mobile data services.

Reliance Communications recently started distributing Apple (TLO: AP-U.TI - news) Inc's latest iPhones on a two-year contract, while most carriers including Vodafone India have sharply cut data prices to boost usage.

Mumbai-based Reliance Communications said quarterly net profit surged to 2.34 billion Indian rupees ($37 million) for its fiscal second quarter to Sept. 30, excluding the gain from a business restructuring provision write-back, far ahead of analysts' estimates of 1.46 billion rupees net profit.

Including the write-back, net profit jumped to 6.75 billion rupees and it was the company's first profit rise in five quarters. Operating revenue grew 3.7 percent from a year earlier to 53.94 billion rupees.

Average revenue per user (ARPU), a key operating metric, declined 7 percent from previous quarter, while revenue per minute (RPM) fell 5.7 percent sequentially to 0.434 rupees in what is usually seen as a seasonally weak quarter for Indian telecoms due to outages and power cuts in monsoon rains.

Vodafone India reported a 3.4 percent sequential decline in decline in ARPU, but RPM was little changed at 0.468 rupees.

VODAFONE INVESTMENT, RELIANCE DEBT WOES

Vodafone is taking full control of its Indian unit by buying out from local partners the 15.5 percent stake it does not already own in a $1.6 billion deal, and also plans to invest additional capital in the unit.

Vodafone India CFO Colman Deegan said on Tuesday the group was yet to determine how much it would invest in the Indian unit by subscribing to fresh equity. Vodafone Group Plc's CEO separately said it would definitely consider an IPO of the Indian unit after a more than $2 billion tax case is settled.

Reliance Communications the most-leveraged among listed Indian carriers with net debt of $6 billion as of end-June, has been planning to cut the debt load by selling assets and raising funds. The company did not give an update on the debt reduction plan in the earnings statement.

Reliance Communications had reported a profit fall in 14 of the 16 quarters to end-June, mainly hit by higher interest costs. Ahead of the results, Reliance Communications shares fell 5.2 percent to 129.20 rupees in a Mumbai market that closed 1 percent lower.