Five telcos understated revenue by ~14,800 cr: CAG

Tata Teleservices, Telenor, Videocon Telecom, Quadrant Televentures, and Reliance Jio Infocomm have understated their adjusted gross revenue (AGR) by over ~14,800 crore, which has resulted in a shortfall of ~1,526.70 crore to the government, according to a report by the Comptroller and Auditor General (CAG) of India.

The report, tabled in Parliament, states the interest on the short payment stood at ~1,052.13 crore for the period up to March 2016.

Mobile service operators are required to share a percentage of their AGR with the government as annual licence fee. Currently, operators pay eight per cent of their AGR as licence fee. In addition, telecom companies are required to pay spectrum usage charges for using air waves allotted to them.

The CAG findings are based on audits of Tata Teleservices and Tata Teleservices (Maharashtra) from 2010-11 to 2014-15; Quadrant Televentures from 2006-07 to 2014-15; Videocon Telecom from 2009-10 to 2014-15; Telenor from 2009-10 to 2014-15; and Reliance Jio Infocomm from 2012-13 to 2014-15.

The CAG had in June tabled a report on six other mobile service operators, Bharti Airtel, Vodafone, Idea Cellular, Aircel, Sistema Shyam Teleservices, and Reliance Communications. The six companies were found to have understated revenues by more than ~61,000 crore over five years, resulting in a short payment of nearly ~7,700 crore in statutory dues to the government.

Reacting to the CAG report, a Reliance Jio spokesperson said, “The charge against Reliance Jio is related to ‘revenue share on realised forex gain’. This is an industry issue and was referred to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which ruled in favour of telecom operators. However, the TDSAT decision was appealed against by the Department of Telecommunications (DoT) and this matter is sub judice in the Supreme Court.”

Sharing details of the five companies, the CAG said the government was paid ~1,015.17 crore less in licence fees, ~511.53 crore in spectrum usage charges, and ~1,052.13 crore as interest applicable on delays in payment.

The government collection from Tata Teleservices is short by ~1,893.6 crore, from Telenor by ~603.75 crore, from Videocon Telecom by ~48.08 crore, from Quadrant Televentures by ~26.62 crore, and from Reliance Jio by ~6.78 crore.

The CAG said the understatement of revenues was done through accounting adjustments for commissions or discounts paid to distributors, promotional schemes like free talk time and discounts to postpaid subscribers, and on roaming services.

There has been a difference of opinion between the CAG and mobile service operators on the definition of AGR and the issue has been in court on several occasions.

In May this year, the Tripura High Court had ruled that revenue earned by telecom operators from activities unrelated to their licence could not be included in the AGR. The court had also ruled that the DoT change the definition of AGR for working out the revenue share of telecom operators.