Comptroller and Auditor General of India (CAG) has revealed shocking facts about top Indian telecom firms. As per initial reports, top 6 telecom companies have under-reported their revenues, due to which Indian Govt. suffered losses to the tune of Rs 12,489 crore.
With such massive revenue loss for the Govt., Telecom Minister Ravi Shankar Prasad has pledged that he will ensure that all financial irregularities are brought out, and necessary action be taken against the culprits.
CAG said in their report, “Verification of records of six PSPs indicated total understatement of AGR of Rs 46,045.75 crore for the period from 2006-07 to 2009-10,”
The 6 telecom firms which have intentionally or unintentionally under-reported their revenues are: Bharti Airtel, Idea Cellular, Vodafone, Aircel, Reliance Communications & Tata Telecom. CAG filed their report inside the Parliament, which stated that these top 6 telecom firms ‘adjusted’ their gross revenues by Rs 46,045 crore between 2006 to 2010; and due to this, Indian Govt. received Rs 12,488.93 crore less revenue as tax.
Telecom Minister Ravi Shankar Prasad has already stated that a special audit shall be conducted for all telecom firms who operated between 2009-10 to 1010-11. He said, “Though the CAG report will go to public accounts committee, whose recommendations will be final after approval by the house, yet the department will take a special audit which is authorized under the licence conditions to discover whether any outstanding due is legitimately required to be paid by the operators,”
Besides, in another report, CAG also revealed that due to adjustment done by these telcos for their one-time entry fee paid in 2012-13 (for those licenses which were quashed by Supreme Court), Indian Govt. suffered a loss of Rs 5476.30 crore.
Which Revenues Were ‘Adjusted’?
As per the CAG report, telecom companies netted-off several discounts and waivers provided to post-paid customers, which led to low revenue reporting. Besides, due to inter-operator traffic discounts being provided by bigger telecom companies, roaming revenues were always under-reported by the telecom firms.
Besides, telecom companies under-reported almost all the revenues which was earned from infrastructure-sharing agreements between the companies; and profits from Forex conversions were also under-reported.
Interestingly, every telecom operator in India resisted auditing of their books since 2009. In 2014, Supreme Court rejected all such pleas, and ordered CAG to audit their financial statements, and asked them to reveal the truth.
Here is the breakdown of the under-reporting done by these 6 telecom operators:
- Reliance Communications: Rs 3,728.54 crore
- Tata Teleservices: Rs 3,215.39 crore
- Airtel: Rs 2,651.89 crore
- Vodafone: Rs 1,665.39 crore
- Idea Cellular: Rs 964.89 crore
- Aircel: Rs 262.83 crore
COAI & AUSPI Reacts
Cellular Operators Association of India (COAI) & Association of Unified Telecom Service Providers of India (AUSPI), which are high profile unions of all telecom operators have reacted strongly to the allegations, terming matter as sub-judice, currently being resolved at various courts in India.
In a joint statement, COAI and AUSPI said, “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.”
We will keep you updated as more details come in..
[Image Source: Shutterstock.com]"CAG Reveals Shocking Facts: Airtel, Idea, Vodafone, Reliance, Aircel, Tata Incur Rs 12,489 Cr Revenue Loss to Govt.",