FIVE TELCOS UNDERSTATED REVENUE: CAG
TELECOM AUDIT Underreporting led to a shortfall of nearly ₹2,578.83 crore
NEWDELHI: The Comptroller and Auditor General of India, in a report released on Tuesday, said non-compliance with licence conditions by five operators led to a shortfall in payment of revenue share to the government to the tune of ₹2,578.83 crore.
NEWDELHI: The Comptroller and Auditor General of India (CAG), in a report released on Tuesday, said non-compliance with licence conditions by five telecom operators led to a shortfall in payment of revenue share to the government to the tune of ₹2,578.83 cr ore.
Tat a Te le services Ltd and Tat a Teleservices (Maharashtra) Ltd together accounted for a lion’s share of the total at ₹1,893.60 cr ore and Reliance J io Info comm Ltd’ s share was ₹6.78 cr ore, the government auditor said.
In the report tabled in Parliament, the CA G said its audit of the basic accounting records and documents of Tata Teleservices and Tata Te le services( Maharashtra ), Quad rant Te le ventures Ltd, Video con Telecommunication Ltd, Telenor group and Reliance J io, for varying periods from 2006-07 to 2014-15, indicated total understatement of annual gross revenue( A GR) of about ₹14,813.97 crore and a consequent shortfall in payment of revenue share to the government to the tune of ₹1,526.70 crore.
The interest due on the shortfall in payment of revenue share for the period up to March 2016 was ₹1,052.13 crore.
Telecom operators a reliable to pay around 3-5% and 8% of the AGRas spectrum usage charges and licence fees to the government.
According to the CAG report, this under statement of gross revenues came in terms of the amount of commission/ discount paid by operators to their distributors/dealers/agents/franchisees; promotional schemes like Free Talk Time/Free Air Time; netting of discounts from revenue pertaining to roaming services as well as infrastructure sharing; short fall/ non-inclusion of for ex gains in gross revenue; noninclusion of interest income as well as profit from the sale of investments; non-inclusion of miscellaneous revenue and profit on sale of fixed assets and bad debts written off and claimed as deductions.
Of the five companies named in the CAG report, only Reliance Jio now runs full-scale operations. The company began commercial operations only in Sep- tember 2016.
Prior to that, in June 2010, Reliance Industries bought a 95% stake in the Mahendra Nahataowned Him ac hal Futuristic Communications Ltd’s arm, Info tel Broadband Services, while also paying the ₹12,848 crore for 20MHz of pan-India spectrum that Infotel bagged in an auction that year.
In January 2013, RI L’ s telecom subsidiary, Infotel Broadband Services Ltd, was renamed as Reliance Jio Infocomm.
According to the report, Reliance Jio’s share of the short-payment was at ₹6.78 crore.
While the company did not start commercial operations in the period mentioned in the report, the government estimates AGR as 5% of the bid value of the spectrum, for which it collects spectrum usage charges and licence fee.
“The chargeon RelianceJio is related to ‘revenue share on realized forex gain’. This is an industry issue and was referred to TD SAT( Telecom Disputes Settlement and Appellate Tribunal) which ruled in favour of telecom operators. However, the TD SAT decision was appealed against by Do T( Department of Telecommunications) and this matter is currently sub jud ice with the Supreme Court ,” a spokesperson at Reliance Jio said.
All the other operators named in the report have either shuttered or sold their businesses.
Videocon shut down operations in 11 circles where the Supreme Court cancelled licences in January 2012. It subsequently won spectrum in five of those circles in a November 2012 auction but exited the mobile business completely almost two years ago.
Quadrant Te le ventures( formerly HF CL Info tel ), a subsidiary of Videocon Telecom which ran the latter’s mobile services in Punjab, ceased operations in February 2017.
Bharti Airtel in October announced the acquisition of Tata Te le services and Tata Teleservices( Maharashtra) on a debtfree, cash-free basis. Air tel has also bought Tel en or AS A’ s India business.
Emails, calls and texts to the other companies remained unanswered till press time.