DoT issues notices to 5 telcos for under-reporting revenue

The Telecom Ministry today issued show-cause notices to five private operators, including Bharti Airtel, Vodafone and RCom, for under reporting revenues, as per a special audit report, for assessment years starting from 2006 to 2008.

Tatas and Idea Cellular have also been served notices by the the Department of Telecom (DoT) which has given 21 days time to response to the notices.

The department has raised a demand of about Rs 1,000 crore from all the telecom companies, sources said, adding that after completion of the given period these five operators would be given an opportunity for personal hearing by Telecom Minister Kapil Sibal.

However, it could not be confirmed that how much demand has been raised from these operators individually. According to one of the estimates made by the DoT, the demand from these operators varied between Rs 60 crore to Rs 300 crore.

Telecom regulator Trai in 2009 had asked the DoT to conduct a special audit of financial accounts of these five telecom companies for the 2006-08 period observing that operators were under-reporting their revenues to avoid payment of licence fee to the government through revenue share.

The move was to check operators' scope to arbitrage, which is shifting revenue from higher licence fee to the lower side. The UASL (basic and mobile) telephony has a licence fee of 6-10% where as NLD, ILD, ISP and Internet Protocol has 6%.

Trai had noticed that some of operators were showing more revenue in segment that carried lower licence fee.

The special audit was for those companies which have multiple licences - Unified Access Service Licence (UASL), National Long Distance (NLD), International Lonag Distance (ILD) and Internet Service Provider (ISP). All the five companies mentioned above have all these licences.