DoT orders a special audit of all major integrated telecom players

The Department of Telecom has accepted suggestions made by the Telecom Regulatory Authority of India to audit the accounts of all the major integrated telecom players in the country to check if the companies are paying revenue share due to the Government. While books of Reliance Communications is already being audited, DoT has now ordered a special audit of Bharti Airtel, Idea Cellular, Vodafone Essar and Tata Teleservices.TRAI had earlier suggested that all the operators should be asked to submit the break-up of income from their various stand-alone subsidiaries to determine the revenue share payable to the Government. The regulator had proposed that the DoT should carry out special audits of the operator’s account books every 3-5 years.

DoT orders a special audit of all major integrated telecom players like RCom, Bharti Airtel, Idea Cellular, Vodafone Essar and Tata Teleservices

Large integrated players are increasingly using differential licence fee to pay lower revenue share to the Government. In the current licence fee regime, telecom companies are required to pay only six per cent of the annual revenues from long-distance services compared to an average levy of 10 per cent, including spectrum charges, for mobile services. These companies are saving on the net outgo to the Government by loading higher revenue component to the licence with lower revenue share.

This had come to light recently when it was found out that RCom was showing all revenues from non-voice services under its Internet licence. Operators are not required to pay any revenue share on the income earned under the Internet licence. RCom’s case was examined by TRAI and also the Central Vigilance Commission after which DoT ordered a special audit on the company’s accounts.

Subsequently, it was brought to the notice of DoT that other operators including Bharti Airtel and Vodafone were allegedly bundling handsets and now showing the income of such deals for paying the revenue share to Government.

While there are no specific allegations against Idea Cellular and Tata Tele, DoT has decided that it will audit the accounts of all the players according to TRAI’s suggestions.

In a letter to the DoT, the telecom regulator had said, “It has been noted that some of the leading integrated telecom service providers are not disclosing relevant financial information, which has direct bearing on the assessment of revenue of the particular segment.”