After ordering a special audit of the country?s second largest telecom player by subscriber base, Reliance Communications, in January for alleged under-reporting of revenues, the department of telecommunications (DoT) has now ordered a similar exercise on the country?s largest telecom operator, Bharti Airtel, as well as Vodafone-Essar, Idea Cellular and Tata Teleservices Ltd.
According to DoT officials, the purpose of the special audit would be ascertain whether there was any loss to the government by way of licence fee in instances when these operators sell bundled handsets along with their services.
Mobile operators pay revenue share licence fee to the government ranging between 6-10% of their adjusted gross revenue depending upon circles. Following a report by the Telecom Regulatory Authority of India, DoT felt that when operators sell bundled handsets with their services, they do not show the revenue accruing from the sale of handsets in their AGR and hence pay no licence fee on it causing loss to the exchequer.
In their defence the operators maintain that revenue from sale of handsets even when bundled with the services, do not accrue to them but goes to the manufacturer. The purpose of the special audit would be to ascertain this.
However, officials said that in the case of Bharti Airtel, the scope could also be to see whether more revenue is being booked in the international and national long distance segment. The revenue share licence fee on NLD and ILD licence is at 6% of the AGR so integrated service providers could save on payment of licence fee if higher growth is in NLD/ILD segment compared to the universal access service licence. This audit would also be done by DoT after the Trai noticed a higher spurt in Bharti?s NLD/ILD revenues. Bharti has consistently denied any such charge. In the case of Rcomm, the special audit was ordered after it was alleged that the company was diverting its data revenue including revenue from SMS and MMS under its Internet service provider licence (ISP). ISPs do not pay any licence fee hence the company saves on payment of licence fee causing loss to the exchequer.
The central vigilance commission (CVC) asked the DoT to probe the allegations of under-reporting revenues.
The Cellular Operators Association of India (COAI) had also alleged that Rcomm was stating its income from non-voice services such as SMS and MMS under the ISP despite being provided through the cellular network.