Under reporting of revenue has been a norm in the telecom industry. Analysts were not surprised with the Comptroller and Auditor General (CAG) report on the Government losing about Rs12,488 crore for under stating of revenue by the operators.
The report tabled by CAG, last week, in the Parliament said that six operators had under reported their adjusted gross revenue (AGR) by Rs46,000 crore between 2006 and 2010 leading to the loss to the exchequer.
Ever since the telecom sector opened up for competition and the players started providing services, under reporting of revenue became a normal practice. The basic reason for this is that the telecom operators have to pay a certain percentage of their revenue as spectrum fee to the Government. This is over and above the one-time licence fee.
Earlier, the revenue share fee was different for different services. For example, for International long Distance (IlD) services, the fee was different than that from the mobile services. This gave an opportunity of arbitrage to the operators and showing the revenue earned from one service under another service became common practice.
In its report, the CAG has pointed out cases of under reporting of revenue due to netting of discounts granted to post-paid subscribers, and roaming revenue due to set-off of inter-operator discounts paid to other operators.
It has also pointed out under reporting of revenue from infrastructure sharing with other telecom operators as well as from forex gains.
The private operators are opposed to the CAG auditing their books since 2009. They went for litigation to stop CAG. It was a Supreme Court verdict in 2014 that allowed CAG to audit their books.
Interestingly, the same operators were gung ho when the CAG came out with an estimated Rs1.7 lakh crore loss to the Government due to issuance of licences to the new operators by the then telecom minister A. Raja. The subsequent cancellation of licences of the new operators helped the incumbent operators. However, the same operators now find that the CAG is not competent enough to audit their books.
But the biggest issue is that the Government has not yet been able to recover any dues form the telecom operators. There have been many instances where the Telcos have been caught doing wrong things. They have been fined for violating licence conditions. The operators go to the Courts and the cases drag on for years. It has become another story similar to bad debt.
The Communications and IT ministry should come out with a report on the total dues that Telcos have to pay to the exchequer and the steps that the government is taking to recover it.
(The writer is a Senior Journalist)