26 firms evince interest in conducting special audit of telcos: DoT sources

Over two dozen firms have evinced interest in being appointed as auditors to conduct the planned special audit of private telecom companies for period FY12 to FY18, and nearly 18 of them have been found to be technically qualified so far, according to a source in the Department of Telecom.

The bids are currently being evaluated, said the Department of Telecom (DoT) official who did not wish to be named. The official said that final shortlisted names -- 4-5 firms are likely to be handed the mandate -- will be based on multiple criteria including the wherewithal of the auditor, as also the fee quoted.

"About 26 firms came forward, and 18 have been found to be technically clear," the official source added.

The audits will be carried out to check for any under reporting of revenue by telecom companies, an exercise that the DoT expects will be wrapped up by middle of next year. Audits will be conducted for all large private telecom companies as also those which have announced an exit or are in the process of merging with bigger rivals.

An official familiar with the entire exercise has earlier said that the idea is to see whether there has been any concealment of revenue by operators. "... Because our licence fee is based on their revenue. We want to ensure that the accounts reveal a fair and true picture of the revenue earned," the source had said.

Telecom service providers pay licence fees and spectrum usage charges to the government on the basis of their income.

The telecom sector has been bruised by falling tariffs, eroding profitability, and mounting debt in the face of stiff competition triggered by disruptive offerings of Reliance Jio, owned by Mukesh Ambani. The industry has been seeking urgent relief measures entailing debt restructuring, cut in levies, and release of GST input tax credit locked up with the government.

Reflecting the financial stress of the industry, the gross revenue of telecom service providers and licence fee paid to the government declined by around 10 per cent to Rs 58,401 crore and Rs 2,929 crore, respectively, in April-June 2018 compared to the year-ago period, according to recent data by telecom regulator Trai.

"Gross revenue (GR) and adjusted gross revenue (AGR) of the telecom service sector for the quarter ended June 2018 has been Rs 58,401 crore and Rs 36,552 crore, respectively," Telecom Regulatory Authority of India (Trai) had said in its Indian Telecom Services Performance Indicator report released in October.

The GR and AGR declined by 10 and 8.11 per cent, respectively, on year-on-year basis. The decline in AGR -- which is revenue earned from sale of telecom services alone -- led to fall in licence fees paid to the government by around 10 per cent to Rs 2,929 crore.