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Six telecom majors understated revenues over a period of 5 years

The revenue was understated also by netting of revenue from infrastructure sharing and non-inclusion of forex gains, interest income and sale of investment.

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Six private telecom operators, including Bharti Airtel, Vodafone, and Idea Cellular, understated revenues by over Rs 61,000 crore over a period of five years, resulting in short payment of nearly Rs 7,700 crore in statutory dues to the government, the Comptroller and auditor general (CAG) said on Friday. Another Rs 4,531.62 crore was due from the six operators as interest on the short paid revenue share.

While Bharti Airtel, Vodafone India, Idea Cellular, Reliance Communications, Aircel understated revenues during 2010-11 to 2014-15, the period for Sistema Shyam begins from 2006-07 to 2014-15. The CAG report was tabled in the Parliament on Friday.

This was done through accounting adjustments for commission or discount paid to their distributors, promotional schemes such as free talk time, and discounts to post-paid subscribers and on roaming services.

The revenue was understated also by netting of revenue from infrastructure sharing and non-inclusion of forex gains, interest income and sale of investment.

According to CAG, Airtel owes to the government Rs 2,602.24 crore in licence fee and Spectrum Usage Charge (SUC) for 2010-11 to 2014-15. It owes another Rs 1,245.91 crore in interest. Vodafone's dues are around Rs 3,331.79 crore, including Rs 1,178.84 crore in interest. Idea's statutory dues stood at Rs 1,136.29 crore plus Rs 657.88 crore in interest. Reliance Communications owes a total of Rs 1,911.17 crore (including Rs 839.09 crore interest), Aircel's dues are Rs 1,226.65 crore and SSTL's, Rs 116.71 crore.

As per the New Telecom Policy, telecom licensees are required to share a percentage of their Adjusted Gross Revenue (AGR) with the government as annual License Fee (LF). In addition, mobile telephone operators were also required to pay Spectrum Usage Charges (SUC) for the use of radio frequency spectrum allotted to them.

CAG said the Gross Revenue (GR) of the licensee operator, as per the licence agreement with Department of Telecom, prohibits any set-offs of related expenditure from revenue and norms for preparation of the accounts for payment of revenue share are built into the licence agreement.

"We observed non-conformities with conditions of licence agreement in the accounts prepared by all the six operators covered in the audit due to which their Gross Revenue (GR) computed for sharing revenue with the government was understated," it said. Even though computation of the GR was not in compliance with the licence agreement, the statutory auditors had always certified that the accounts were prepared in accordance with the guidelines/norms.

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