Trai Seeks Comments From Telcos On Accounting Separation Norms

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New Delhi: : Finally, there is some progress on evolution of accounting separation guidelines for telecom companies, aimed at identifying instances of cross-subsidisation of services.

The Telecom Regulatory Authority of India (Trai), which had mandated consultancy firm AF Ferguson to work out the formats in which these companies have to submit their accounts, has circulated some of these formats among the service providers for their comments recently, sources said.

Trai had floated a consultation paper on accounting separation norms over two years ago in May 2000. The issue has been hanging fire due to the complex nature of the job. It would be a challenge to implement not only for the public sector companies like Mahanagar Telephone Nigam Ltd (MTNL), Videsh Sanchar Nigam Ltd (VSNL) and Bharat Sanchar Nigam Ltd (BSNL) but also for the private sector telecom companies.

In fact, BSNL , which is just in the process of shifting over to commercial accounting norms from government accounting norms, would have to make the maximum effort to get the accounting separation in place. Some countries have taken longer than a decade to implement accounting separation. Sources said that the country’s telecom market has reached the stage of maturity to handle accounting separation.

However, there is no time-frame on when the accounting separation could actually be implemented, sources said. “It is still at a very preliminary stage. It is taking so long because it is a very difficult task,” they said.

As per the consultation paper, figuring out the cost of providing a particular service is the first and most important step in creating a fair, transparent and just regulatory environment. The accounting separation exercise is aimed at evolving methodologies for preparation of accounts which will facilitate availability of detailed information on costs allocated to different services.