The long-running cat-and-mouse game between the Comptroller and Auditor General (CAG) of India and private telecom players has brought some new names under the scanner. CAG's latest report, tabled in Parliament, claims that five leading private telcos have understated their adjusted gross revenue (AGR) by over Rs 14,800 crore, resulting in a shortfall of Rs 1,526.70 crore to the exchequer. When you add the interest due on the short payment, calculated to be Rs 1,052.13 crore till March 2016, the amount owed to the government shoots up to Rs 2,578.83 crore.
According to the Compliance Audit Report on Sharing of Revenue by Private Telecom Service Providers up to 2014-2015, the five errant telecom players are Tata Teleservices, Telenor, Videocon Telecom, Quadrant Televentures and Reliance Jio Infocomm. Tata is reportedly the biggest defaulter among them-the government collection from it is short by Rs 1,893.6 crore for the period 2010-11 to 2014-15. Telenor comes next on the list with a shortfall of Rs 603.75 between 2009-10 and 2014-15, followed by Videocon Telecom at Rs 48.08 crore (audit period 2009-10 to 2014-15), Quadrant Televentures at Rs 26.62 crore (2006-07 to 2014-15) and Reliance Jio at Rs 6.78 crore (2012-13 to 2014-15).
Sharing details of the five companies, the CAG said the government was paid Rs 1,015.17 crore less in licence fees and Rs 511.53 crore less in spectrum usage charges (SUC). As per rules, mobile service operators have to pay 8% of their AGR to the government as licence fee along with SUC for using air waves allotted to them. The auditor added that telcos also understated revenue collections through accounting adjustments for commissions or discounts paid to distributors, promotional schemes like free talk time and discounts to postpaid subscribers, netting of discounts from revenue pertaining to roaming services, non-inclusion of forex gains and interest income, and netting of revenue from infrastructure sharing.
Reacting to the CAG report, a Reliance Jio spokesperson said, "The charge against Reliance Jio is related to 'revenue share on realised forex gain'. This is an industry issue and was referred to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), which ruled in favour of telecom operators. However, the TDSAT decision was appealed against by the Department of Telecommunications and this matter is sub judice in the Supreme Court."
This is not the first time that the CAG has hauled up private telcos for underreporting revenues. In June this year, it had tabled a report on six other private players-Bharti Airtel, Vodafone, Idea Cellular, Aircel, Sistema Shyam Teleservices and Reliance Communications-shortchanging the exchequer by nearly Rs 7,700 crore, not including interest dues amounting to Rs 4,531.62 crore. Previously, in March 2016, the CAG had indicated a loss of Rs 12,489 crore to the exchequer for the period from 2006-07 to 2009-10.
The reason for this repeated difference in the telcos revenue calculation and the CAG's calculations is a difference in opinion in the very definition of AGR. The telcos in the country have been involved in protracted litigation challenging the government's stand on AGR. In May this year, the Tripura High Court had ruled that revenue earned by telecom operators from activities unrelated to their licence could not be included in the AGR. The court had also ruled that the Department of Telecommunications change the definition of AGR for working out the revenue share of telecom operators. But this is one battle that's unlikely to end anytime soon.