 "Six telcos face special audit after CAG probe")
The CAG said the financial impact due to understatement of gross revenues was Rs 1,507.25 crore for Reliance Communications, Rs 1,357.68 crore for Tata Teleservices, Rs 1,066.95 crore for Airtel, Rs 749.85 crore for Vodafone, Rs 423.26 crore for Idea and Rs 107.61 crore for Aircel. The combined loss includes interest charges of Rs 7,276.33 crore.
Soon after the report was tabled in the Parliament on Friday, the government said it will conduct a special audit of telecom companies. “This is again a legacy issue of the previous government. The department is also going to undertake a special audit as permissible under the licensing conditions for three years — 2008-09, 2009-10 and 2010-11,” said telecom minister Ravi Shankar Prasad. A special audit was done earlier for 2006-07 and 2007-08, based on which a demand of Rs 1,846.51 crore against five telecom companies, which have challenged it in the court.
Earlier, in its report, the CAG reported instances of under-reporting of revenue due to netting off of discounts/waivers granted to post-paid subscribers and under-invoicing of roaming revenue due to set-off of inter-operator traffic discounts paid to other operators. Also, there was under-reporting of revenue from infrastructure sharing with other telecom operators, as well as from forex gain
According to another CAG report, the adjustment of one-time entry fee paid by telecom companies whose licences were quashed by the Supreme Court against the spectrum price they paid in 2012-13 deprived national exchequer of Rs 5,476.3 crore.
The government levies about eight per cent licence fee on an operator’s adjusted gross revenue (AGR), while spectrum usage charge (SUC) is three-eight per cent. However, the definition of AGR has been under contention since 2003. Telecom operators have argued the definition given in the license agreement was very broad and covered non-core revenue. The operators have approached Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and various other courts, challenging the definition of AGR. Though the telecom department has said the AGR should include all revenue earned by a service provider, including from corporate receipts, sale of handsets, real estate transactions and interest earned from bank deposits. Currently, the matter is under litigation.
In a joint statement, Ashok Sud, secretary general, Association of Unified Telecom Service Providers of India (AUSPI) and Rajan S Mathews, director general, Cellular Operators Association of India (COAI), said, “We would like to clarify that matters relating to interpretation of ‘GR/AGR’ of telecom companies for the purpose of calculation of license fees are under litigation in various judicial forums including the TDSAT, High Courts and the Supreme Court.”
The issues pointed out by the CAG pertain to those disputes, which have either been settled or stayed by various Courts. Further, we would like to reiterate that our member companies follow the highest standards of corporate governance and have always been in compliance with all regulations, the joint statement said.
The CAG audit report on communication and IT sector said, “Set-off of the non-refundable entry fee of Rs 5,476.30 crore paid by licensees in 2008 whose licences were declared illegal and quashed by the Supreme Court against the auction price payable for spectrum in 1800 MHz/800 MHz held in November 2012/March 2013 deprived the government of the revenue to that extent.” The government in 2012 decided to adjust the license fee paid by companies whose permits were quashed in the 2G case. The major beneficiaries of this scheme are Telewings Communications (now Telenor), Videocon Telecom and Sistema Shyam Teleservices.
It also said the government continued to allocate wireless frequencies in spectrum band of 3.3-3.4 GHz without auction free of cost despite recommendation from the regulator (Trai) in violation of the apex court judgment that said spectrum should be allocated through auction. CAG added that the continued allocation “administratively, free of cost resulted in significant loss to the public exchequer by way of non-realisation of one-time charges which the government would have realised had they auctioned the spectrum.” “This was despite recommendation of Trai to auction the spectrum in the 3.3-3.4 GHz band, which also violated the intent and spirit of the Supreme Court judgment,” the report added.
Operators had in the past resisted auditing of their books since 2009 and had moved courts to challenge mandate of the CAG. In April 2014, Supreme Court had ruled against it and favoured CAG, after which operators shared information for the official auditor. In the report, CAG also flagged discrepancies in assessment of revenue share by DoT and non-existence of appellate mechanism leading to high number of litigations.