The Comptroller and Auditor General of India (CAG) in its latest report has said that six private telecom operators, including Bharti Airtel, Vodafone India and Idea Cellular, have under reported revenues to the tune of more than Rs 61,000 crore between FY11 and FY15. The government auditor also said that this understatement led to a short payment of revenue of Rs 7,697.62 crore to the government, besides the operators also owe Rs 4,531 crore as interest on this short payment. The findings form part of the CAG’s latest report on telecom, which was tabled in Parliament on Friday.“To sum up the verification of records of six telecom operators by audit indicated total understatement of adjusted gross revenue (AGR) of Rs 61,064.56 crore… and consequent short payment of revenue share to government of India to the tune of Rs 7,697.62 crore. The interest due on the short paid revenue share, for the period up to March 2016 was Rs 4,531.62 crore,” the report said.
For five operators, the audit period is from 2010-11 to 2014-15, while for Systema Shyam (SSTL), the period is from 2006-07 to 2014-15. The CAG report points out that this understatement in gross revenue (GR) and AGR was done by adjusting the amount paid as commission or discount to distributors, dealers, agents, etc; promotional free airtime schemes; discounts given to postpaid subscribers; revenue from infra sharing; roaming revenue netted off by discount given to other operators; non-inclusion of foreign exchange gain; Non/short inclusion of interest income and dividend income among others.
When contacted, industry body COAI’s director general Rajan S Mathews said that there is a “difference of opinion” between the CAG and the telecom operators on the definition and measurement of the AGR.The issue of AGR has been in courts on various occasions in the last 15 years. The operators have followed the various guidelines that have emerged out of these cases in the high courts and the tribunal TDSAT, he said, adding that the DoT will now analyse the issue and will accordingly ask the operators to respond.
The CAG’s report reveals that “short/non-payment” of License Fee (LF), Spectrum Usage Charge (SUC) and interest due as on March 31, 2016 on the six telecom operators – Bharti, Vodafone, Idea, Reliance Communication (RCom), Sistema Shyam Telecom (SSTL) and Aircel – is Rs 12,229.24 crore, which includes LF of Rs 4,859.27 crore, SUC of Rs 2,838.35 crore and interest of `4,531.62 crore. Telcos pay LF and SUC at a percentage of AGR every quarter on a self-assessment basis to the government.CAG’s report states that Bharti’s short/non-payment of LF and SUC is Rs 1,577.12 crore and Rs 1,025.12 crore, respectively for the period FY11-FY15. Besides, the country’s largest telecom operator also owes to the government Rs 1,245.91 crore in interests.
Similarly, Vodafone owes a total of Rs 3,331.79 crore, Idea (Rs 1,794.17 crore), RCom (Rs 1,911.77 crore), SSTL (Rs 116.71 crore) and Aircel (Rs 1226.65 crore) in SUC, LF and interest.“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 GR computed for sharing revenue with the government was understated,” CAG said in the report.It further said that 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 contained in the licence agreement and the companies always presented an affidavit to Department of Telecom (DoT) affirming that their GR was as defined in the agreements.
The auditor also rapped the DoT saying, “These statements submitted by the operators appeared to be only a perfunctory practice as they consistently departed from the stipulations in the Unified Access Service License (UASL) agreements while computing GR/AGR. DoT on its part did not take any proactive steps to ensure that the licensees disclosed their revenue as stipulated in the licence agreements.”