The Comptroller and Auditor General of India (CAG) on Friday said that six private telecom operators including Bharti Airtel, Vodafone, and Idea Cellular understated revenues by more than Rs 61,000 crore over five years, which resulted in short payment of nearly Rs 7,700 crore in statutory dues to the government.
The CAG, in its report tabled in Parliament, said another Rs 4,531.62 crore was due from these operators as interest on the short paid revenue share. It said that Airtel, Vodafone, Idea, RCom and Aircel has understated revenues during 2010-11 to 2014-15 period through accounting adjustments for commission or discount paid to their distributors, promotional schemes like free talk time and discounts to post-paid subscribers and on roaming services.
The CAG said that these private telecom operators also understated revenue by "netting of income from infrastructure sharing and non-inclusion of forex gains, interest income, and sale of an investment."
In its report, the CAG said that the Sunil Mittal-led Airtel owes the government Rs 2,602.24 crore in license fee and spectrum usage charge (SUC) and Rs 1,245.91 crore in interest for 2010-11 to 2014-15. Similarly, Vodafone owes Rs 3,331.79 crore including Rs 1,178.84 crore in interest. It said that Idea Cellular owes Rs 1,136.29 crore in license fee and spectrum usage charge (SUC) and Rs 657.88 crore in interest. RCom, Aircel, and SSTL owe Rs 1,911.17 crore, Rs 1,226.65 crore and Rs 116.71 crore, respectively.
According to norms, telecom service providers are required to share a percentage of their Adjusted Gross Revenue (AGR) with the government as annual License Fee (LF), besides paying Spectrum Usage Charges (SUC) for the use of radio frequency spectrum allotted to them.
As per the licence agreement with Department of Telecom, Gross Revenue (GR) of the licensee operator prohibits any set-offs of related expenditure from revenue and norms for preparation of the accounts for payment of revenue share are built into the licence agreement, the CAG said, adding that it 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 even though computation of the GR was not in compliance with the license agreement, the statutory auditors had always certified that the accounts were prepared by the guidelines/norms.
"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 (gross revenue). DoT on its part did not take any proactive steps to ensure that the licensees disclosed their income as stipulated in the license agreements," CAG was quoted as saying in media.
CAG alleged that telecom operators didn't recognise promotional offers as revenue while discounts or waivers given to post paid subscribers over and above tariff plans submitted to the TRAI. Further, telcos reduced the gross income by the amount of commission paid to distributors, dealers, agents, and franchisees that are employed to sell their prepaid products for customer acquisition.
Additionally, telcos deducted discounts offered to international operators for roaming services along with revenue from infrastructure sharing.