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.”
Short-paid revenue
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.
Definition challenged
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.
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