A government-appointed auditor submitted a report last month saying that RCom has under-reported revenues to the government, causing a loss of licence fees to the exchequer. Among other findings in the report was that some non-wireless revenues were reported as wireless revenues to shareholders.

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What’s more, the difference kept widening. In fiscal year 2007-08, revenues reported to shareholders were 20% higher compared with those reported to the government. In the next fiscal, this increased to 33.5% and in the June quarter of this fiscal, it jumped to as much as 57%.

In the earnings call with analysts, the RCom management said that wireless revenues reported to the government for the September quarter stood at Rs3,200 crore. Wireless revenues reported to shareholders stood at Rs4,010 crore, around 20% higher. This is a big reduction in the gap compared with the last few quarters.

On a quarter-on-quarter basis, the company’s wireless revenues rose by around 5%, based on the numbers released by it to the government. In sharp contrast, wireless revenues reported to shareholders fell 16.3%. Reported profit of the segment fell 29% sequentially to Rs1,313 crore at the Ebitda (earnings before interest, taxes, depreciation and amortization) level.

One of the explanations given by RCom for the sharp fall in wireless revenues was that customers for its CDMA services are now buying handsets directly from vendors, rather than procuring a bundled offering from the company. CDMA, or code division multiple access, is a technology platform for mobile telephony.

According to one analyst, this is a departure from earlier disclosures by the company that revenues and cost related to handset sales were accounted for in the “others" segment. According to another analyst with a domestic institutional broker, there seems to be some reclassification in the company’s segmental revenues and profit.

While wireless revenues and profit fell sharply, those of the other businesses such as long-distance voice, data and broadband rose smartly. Gross revenues of the other operating segments grew by 18% sequentially to Rs3,034 crore and their Ebitda rose 12% to Rs843 crore.

The sharp drop in wireless revenues and profit last quarter raises questions about the earlier reported revenues and profit for the wireless business. For instance, the average revenue per user stood at Rs210 in the June quarter. This has now fallen sharply by 23% to Rs161 in the September quarter.

Given the state of flux that the industry is in, with market leaders now adopting a per-second billing policy, the company’s performance metrics could be under further pressure.

So while shares of RCom have fallen by 45% in the past one month, they could continue to face selling pressure, both because of competitive pressure as well as owing to concerns about its accounting practices.