Govt expected to launch investigation into under-reporting of revenue in early 2019

14 Nov 2018

The Indian government is preparing to conduct an investigation into potential under-reporting of revenues by providers from the 2011/12 financial year onwards, the Economic Times writes, citing an unnamed government source. According to the official, auditors are expected to be appointed in the first week of January 2019 and the investigation should be concluded within the subsequent nine months. The firms understood to be facing scrutiny are Bharti Airtel, Vodafone Idea – separately as Vodafone India and Idea Cellular, as the time period to be analysed by auditors pre-dates the merger of the two operators – Tata Teleservices Limited (TTSL) and Reliance Jio Infocomm (Jio). Providers are required to pay the government a portion of their adjusted gross revenue (AGR), but how this figure should be calculated is disputed. As such, the audits are expected to focus on accounting adjustments and will look into how the companies record income from infrastructure sharing, foreign exchange gains and interest along with their handling of commissions and discounts for their distributors or related to promotional schemes.

As previously reported by TeleGeography’s CommsUpdate, industry body the Cellular Operators Association of India (COAI) warned that the audits were likely to lead to more litigation as operators would mount legal challenges against additional charges. The COAI’s head Rajan Matthews criticised the government’s handling of the financially stressed sector and described the investigation as ‘another way for the telecom department to see if they can charge us any other kind of dues.’