Spl audit of Airtel says it may owe Rs 174 cr to govt

The company says dealer margins are not included in the accounts of Bharti, so there was no question of paying licence fee.

While Bharti Airtel may not be guilty of deliberate evasion of licence fee payment, there may be a case for asking it to pay a sum aggregating Rs 174 crore in this regard, indicate the special auditors appointed by the government to probe the issue.

The auditors, Contractor, Nayak & Kishnadwala, noted the company had not included the margin it paid dealers for selling recharge coupons as part of their revenue and, therefore, hadn’t paid licence fee on it.

They estimated Rs 98 crore would be due on this account. Bharti, however, says it isn’t liable to pay licence fee on distributor margins after a telecom disputes appellate tribunal (TDSAT) judgement of August 2007, which said licence fee is only applicable on the realised revenues shown in the accounts of a company and not on the end-price collected by retail outlets.

Therefore, the company says, dealer margins are not included into the accounts of Bharti, so there was no question of paying licence fee on that amount. This TDSAT ruling is binding upon the Department of Telecommunications (DoT), as in a Supreme Court directive of January this year, it adds.

The point needs study, admit the audtiors, and they have asked DoT to examine the TDSAT order and take a final decision.

Further, the auditors have said, Bharti has a liability of Rs 76 crore due to earnings from foreign exchange fluctuations, interest on money or mutual funds, amongst others, which are not from telecom services and, therefore, had not been included for purposes of calculating the licence fee payment to the government.

“Bharti Airtel has always maintained the highest standards of corporate governance and displayed highest regard for regulatory compliance. The findings of the special auditors appointed by DoT has validated our belief and has reconfirmed that all payments of licence fee and spectrum charges are as per the licence conditions,” said Manoj Kohli, CEO & Joint Managing Director of Bharti Airtel.

The audit report was given earlier this week to DoT. The government had ordered the special audit in April 209, of the account books of five top private cellphone companies — Reliance Communications (RCom), Bharti Airtel, Vodafone Essar, Tata Teleservices and Idea Cellular. The aim was to make sure they had correctly reported and shared revenue data with it for calculating their licence fee. The audit reports for all other operators are likely to come within a week.

The first audit report was given in October 2009, on RCom and it said the company was inflating its revenues in accounts sent to shareholders, while showing much lower figures to the regulator, Trai, thus underpaying licence fee. The auditors, Parakh & Co, said during 2007-08, RCom’s actual wireless revenue was Rs 12,298 crore, but it inflated the figure by 23 per cent to Rs 15,213 crore while reporting the performance to shareholders. While, for the same year, the company under-reported revenues to Trai, as a result of which it allegedly evaded licence fees and spectrum charges worth Rs 224.8 crore. RCom had denied all these charges.