CAG accuses six cellcos of hiding USD6.9bn of revenues over three years

14 Mar 2016

India’s Comptroller and Auditor General (CAG) has accused six cellcos – Reliance Communications (RCOM), Tata Teleservices (TTSL), Vodafone India, Bharti Airtel, Idea Cellular and Aircel – of understating gross revenues between 2006/07 and 2009/10 to a combined total of INR460.46 billion (USD6.87 billion), causing a loss of INR124.89 billion to the national exchequer, the Economic Times writes. The CAG claims that operators hid revenues by wrongly netting off discounts to post-paid subscribers, as well as discounting the value of promotional schemes from gross revenues and commissions and discounts to distributors.

Responding to the accusations, industry groups Cellular Operators Association of India (COAI) and the Association of Unified Telecom Service Providers of India (AUSPI) issued a joint statement saying that the issue relates to a dispute over interpretations of Gross Revenue and Adjusted Gross Revenue (AGR) for the purposes of licence fees. The statement added that the matter is under litigation in various courts, including the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), High Courts and the Supreme Court, noting: ‘the issues pointed out by the CAG pertain to those disputes which have either been settled or stayed by various courts.’ Under the terms of the cellcos’ licences, turnover from non-core sources is included for the purposes of calculation AGR, but this stance is currently being challenged by the providers.

Nevertheless, as a result of the CAG’s report, the government has instructed a special audit on the operators for the three years from 2008/09 to 2010/11 to confirm whether or not there are outstanding dues owed by the providers.