Govt takes Rs 12,489 cr hit as telcos understate revenue: CAG

Under-invoicing of revenue by six telecom operators including Reliance Communications, Vodafone and Airtel caused Rs 12,488 crore loss to exchequer, the CAG said in a damning report today.
In a report tabled in Parliament, the Comptroller and Auditor General of India (CAG) said Reliance Communications, Tata Telecom, Vodafone, Airtel, Idea and Aircel under-reported their adjusted gross revenue by Rs 46,045.75 crore, leading to a loss of Rs 12,488.93 crore to the exchequer from 2006 to 2010.
In separate findings, CAG said adjustment of one-time entry fee paid by telecom firms, 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.

Telecom Minister Ravi Shankar Prasad on his part said the special audit of the operators book would be ordered for three years -- 2009-10 to 2010-11, to find if there is any outstanding due on them.
Reacting to the CAG report, telecom industry bodies COAI and AUSPI in a joint statement said the matters relating to interpretation of Gross Revenue/Adjusted Gross Revenue 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 statement added.

The CAG report has been much awaited as operators had been resisting auditing of their books since 2009 and had moved different courts to challenge mandate of the official auditor. It was only after Supreme Court settled the issue in favour of the CAG in April 2014 that they were compelled to share info.

The auditor 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.

The financial impact due to understatement of Adjusted Gross Revenue (AGR) stood at Rs 3,728.54 crore for Reliance Communications, Rs 3,215.39 crore for Tata Teleservices, Airtel (Rs 2,651.89 crore), Vodafone (Rs 1,665.39 crore), Idea (Rs 964.89 crore) and Aircel (Rs 262.83 crore), the CAG said.