India’s opaque mobile phone companies

Six telcos slapped with demand notice of Rs 100 crore each to reclaim dues

GN Bureau | August 13, 2016


#telecom service providers   #KV Thomas   #CAG   #PAC   #public accounts committee   #Telecom   #Ravi Shankar Prasad  

Facing a loss pegged at  Rs 12,488 crore by the CAG due to under-reporting of revenue by telecom service providers, the department of telecommunications (DoT) has initiated phase-wise process of recovery. The department has sent a demand notice of Rs 100 crore each to six telecom operators – Airtel, Reliance Communications, Vodafone, Idea, Tata and Aircel – to reclaim the initial instalment of dues to the government for the year 2008-09. The DoT will issue  a second set of notices pertaining to the dues for the year 2006-07 towards end of July.

According to a CAG report titled ‘Sharing of revenue by private telecom service providers during the years 2006-07 to 2009-10’, the six major telecom service providers understated their revenue by Rs 46,000 crore, depriving the government of a total revenue of Rs 12,488.93 crore. The report was tabled in parliament in March. 

The public accounts committee (PAC), which is examining the CAG report, called a meeting of all six telcos and representatives of the DoT. PAC chairman KV Thomas told the media that the telcos offered to have an out of court settlement. The offer, however, was rejected by the DoT.
After the CAG report, the government had ordered a special audit of telcos for the period 2008-11. This triggered a political blame game between the Congress and the BJP, with former accusing the latter of covering up a “telecom scam”.

Taking on the government, Congress chief spokesman Randeep Surjewala, accused it of brushing the ‘telecom scam’ under the carpet. “PM Modi who used to say ‘na khaoonga, na khaane doonga’ yet again [made] another false promise.”
He alleged that the government is “surreptitiously taking steps” to protect the interests of six leading telecom companies by helping them avoid the payment of charges rightfully owed to the government.

Union minister Ravi Shankar Prasad, however, said it related to the period when the UPA was in power.
“Congress needs to understand that there is no underreporting case under the NDA government. It is a case of sin of the Congress-led UPA government,” the minister said.

The CAG in its report said, “The government of India was deprived of a total revenue of Rs 12,488.93 crore on account of short/non-payment of licence fee (Rs 3,752.37 crore), spectrum usage charges (Rs 1,460.23 crore) and interest (Rs 7,276.33 crore) due from the six private telecom service providers for the years 2006-07 to 2009-10.”

According to the CAG report, Airtel owes Rs 2,651.89 crore (third highest among the six telcos) to the government. Reliance owes Rs 3,728.54 crore to the government – this is the highest non-payment of revenue by a telco. Tata owes Rs 3,215.39 crore to the government.

Justifying the delay in sending demand notices to the telcos, the DoT said that the auditor tabled the report in March but the details were shared with the department only in June. “The department received the key documents scrutinised by the CAG in mid-June 2016. These are being vigorously examined and the process of issue of demands for the four financial years for six operators in 22 licence service areas in consonance with licence agreement is currently ongoing,” the department said.

“Revenue assurance is the top priority of the DoT. The government is determined to recover every rupee of underpaid amount with interest and penalty from every defaulting company in the minimum possible time,” the department said.


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The article appears in the August 1-15, 2016 issue of Governance Now

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