Understated revenues by Rs. 61,000 crore, reports CAG
Six leading private telecom players understated their revenues by over Rs. 61,000 crore, depriving the exchequer of Rs. 7,697.62 crore, the Comptroller and Auditor General of India said in a report tabled in Parliament on Friday.
The auditor also questioned the Department of Telecom (DoT) for failing to take any “proactive steps to ensure that the licencees disclosed their revenue as stipulated in the licence agreements.”
The interest dues on the short-paid revenue would amount to Rs. 4,531.62 crore, the auditor noted, taking the total potential revenue at stake for the government at over Rs. 12,220 crore.
This revenue loss occurred over the five-year period from 2010-11 to 2014-15 for five telcos — Bharti Airtel, Vodafone, Idea Cellular, Reliance Communications and Aircel. For Sistema Shyam Teleservices Limited (SSTL), the findings are for the 2006-07 to 2014-15 period.
According to the CAG, the shortfall in licence fee (LF) and Spectrum Usage Charge (SUC) payments owing to the understatement of adjusted gross revenues by telecom players stood at Rs. 2,602.24 crore for the country’s largest telecom player Bharti Airtel. It was Rs. 2,152.95 crore for Vodafone, Rs. 1,136.29 crore for Idea, Rs. 1,072.68 crore for Reliance Communications, Rs. 670.85 crore for Aircel and Rs. 62.61 crore for SSTL.
In its response to the audit finding, the DoT pointed out that the basic definition of gross revenue and adjusted gross revenue was challenged by the operators in 2002-03.
“Since then, there has been protracted litigation and it is continuing till date.” According to the auditor, the telecom players suppressed revenues through accounting adjustments for commissions or discounts paid to distributors and promotional schemes like free talk time, as well as discounts for users of post-paid and roaming services.
The exchequer was also shortchanged by understating revenue by simply excluding forex gains, interest income, sale of investment, miscellaneous revenue and profit on sale of fixed assets and dividend income from their reported aggregated gross revenue, as per the CAG.
The telecom operators share a percentage of their aggregated gross revenue with the government as annual LF. Besides, they are also required to pay SUC for using airwaves allotted to them.