New Delhi: The department of telecommunications (DoT) is preparing to slap demand notices to the tune of around ₹ 12,500 crore on at least six telecom firms after the government auditor found they had under-reported revenue by ₹ 46,000 crore.
In a report submitted in February, the Comptroller and Auditor General (CAG) said the six companies had under-stated their revenue for the four years from 2006-07 to 2009-2010.
“The report points out a shortfall of ₹ 5,000 crore of licence fee and spectrum usage charge and ₹ 7,000 crore of interest," said a DoT statement released on Thursday night.
The six service providers are Bharti Airtel Ltd, Vodafone India Ltd, Aircel Ltd, Reliance Communications Ltd, Tata Teleservices Ltd and Idea Cellular Ltd.
All six companies declined to comment. Rajan Mathews, director general of Cellular Operators Association of India, could not be reached for comments.
A senior DoT official said on condition of anonymity that the department will be issuing demand notices to the telecom firms.
DoT received the key documents scrutinized by the CAG in mid-June 2016, according to the DoT statement.
“These are being vigorously examined and the process of issue of demands for the four financial years for six operators in 22 licence service areas in consonance with licence agreement is currently ongoing," said the statement.
“Revenue assurance is the top priority of DoT. The government is determined to recover every rupee of underpaid amount with interest and penalty from every defaulting company in the minimum possible time," it added.
The demand notices will be a blow to a telecom industry weighed down by ₹ 4 trillion in debt as of 31 March, and ahead of an expensive spectrum auction. Rating agency Crisil Ltd said in a report this week that telecom firms may have to spend ₹ 1 trillion to buy spectrum in the upcoming auction.
Telecom firms, facing a potential crackdown on call drops, also plan to invest a combined ₹ 12,000 crore in a 100-day action plan to improve their quality of service.
The DoT statement came on a day when the opposition Congress accused the National Democratic Alliance government of protecting the interests of telecom companies. Congress spokesperson Randeep Singh Surjewala said the government hadn’t issued recovery notices to the telecom firms and accused it of “trying to side-step the entire issue".
DoT noted that the alleged violations took place before the present government came to power.
“The documents came to us in June and we were thoroughly examining them and will now be issuing the notices. Therefore, there is no delay at our end on the same," said the DoT official cited above.
In 2009, CAG was not allowed to audit the books of accounts of private telecom companies, which moved the courts to block the audit. In 2014, the Supreme Court passed an order in favour of the CAG, following which the audit was conducted.
In its report submitted this year, the CAG found an alleged understatement of income by the six companies in the four years.
“Verification of records of six PSPs (private telecom service providers) indicated total understatement of ₹ 46,045.75 crore in gross revenue, having corresponding impact of ₹ 3,752.37 crore on licence fee (LF) and ₹ 1,460.23 crore on spectrum usage charge (SUC). The interest on this short/non-payment of LF and SUC works out to ₹ 7,276.33 crore," said CAG.
The six telecom operators, in a joint statement issued earlier, had contested the CAG findings. They said that the definition of adjusted gross revenue for calculating licence fee was under litigation in various judicial forums.
“This is a highly complex issue of national importance and will be dealt accordingly by concerned authorities," said T.V. Ramachandran, president of the Broadband India Forum.