Reliance Jio, Tata Teleservices, others understate revenue by Rs 14,000 crore, says CAG
Reliance Jio, Tata Teleservices, others understate revenue by Rs 14,000 crore, says CAG
Tata Teleservices, Telenor, Videocon and Reliance Jio are among five telecom firms which have understated revenues by over Rs 14,800 crore, resulting in a short fall of nearly Rs 2,578 crore to the exchequer, government auditor CAG said today.
As per the report of Comptroller and Auditor General of India tabled in Parliament, government was paid Rs 1,015.17 crore less in licence fee, Rs 511.53 crore in spectrum usage charge, and Rs 1,052.13 crore as interest applicable on delay in payment.
The five telecom companies it named are Tata Teleservices, Telenor, Videocon Telecom, Qaudrant (a Videocon group firm) and Reliance Jio.
The government collection from Tata Teleservices is short by Rs 1,893.6 crore, Telenor - Rs 603.75 crore, Videocon - Rs 48.08 crore, Quadrant - Rs 26.62 crore and Jio - Rs 6.78 crore for licence fee, SUC and applicable interest charges.
CAG said: "To sum up the verification of records of five PSPs (private sector players) by audit indicated total understatement of AGR (adjusted gross revenue) of Rs 14,813.97 crore for the period up to 2014-15 and consequent short payment of revenue share on Government of India to the tune of Rs 1,526.7 crore."
It added that interest due on the short paid revenue share for the period up to March 2016 was Rs 1,052.13 crore.
The CAG findings are based on the audit of Tata Teleservices and Tata Teleservices (Maharashtra) Ltd from 2010-11 to 2014-15; Quadrant Televentures (2006-07 to 2014- 15); Videocon Telecom (2009-10 to 2014-15); Telenor (2009-10 to 2014-15) and Reliance Jio Infocomm from 2012-13 to 2014-15.
Videocon Telecom, Telenor (Telewings) and Tata Teleservices have sold their mobile businesses to Bharti Airtel, while Quadrant has shut down its mobile services.
CAG observed that telecom operators deducted discounts offered to dealers and customers; free talktime; interest earned from investments and some asset sales from their gross revenue. They should have been part of the adjusted gross revenue (revenue earned from telecom services) for calculation of licence fee and SUCs.
In case of telecom operators offering free talktime to their subscribers, the auditor said that "airtime is not a free commodity, has an intrinsic value" and by making free talktime or promotional offers, telecom operators "were foregoing the revenue resulting in avoidance of LF and SUC".
CAG pulled up telecom operators for deducting expenses incurred in the form of discounts to dealers and distributors, saying that these expenses are in the nature of marketing spent and cannot be deducted from revenue meant for calculating government's share.
The auditor found that Tata Teleservices had written off bad debt that resulted in understatement of its gross revenue by Rs 1,026.01 crore.
CAG said Unitech Wireless transferred its mobile business to Telenor's Indian arm Telewing Communications at a profit of Rs 251.5 crore in 2013-14, but this profit was not included for computing revenue share with government.
Most of the deductions considered by the CAG for computing of revenue of telecom operators are sub-judice matters.
Reacting to the CAG report, Reliance Jio, which had not commenced its commercial operations during the audit period, said that the charge is related to 'revenue share on realised forex gain'.
It added: "This is an industry issue and was referred to TDSAT which ruled in favour of telecom operators. However, the TDSAT decision was appealed against by DoT and this matter is currently subjudice with the Hon'ble Supreme Court."
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