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The CAG report has been much awaited as operators had been resisting auditing of their books since 2009 and had moved different courts to challenge mandate of the official auditor.
The government has suffered a loss of Rs 12,488.93 crore (Rs 124.88 billion) due to under-invoicing of gross revenue by six telecom companies including Reliance Communications, Vodafone and Bharti Airtel, the CAG said in a damning report on Friday.
The Comptroller and Auditor General of India (CAG) in a report tabled in Parliament said Reliance Communications, Tata Telecom, Vodafone, Airtel, Idea and Aircel under reported their adjusted gross revenue by Rs 46,045.75 crore (Rs 460.45 billion), leading to a loss of Rs 12,488.93 crore (Rs 124.88 billion) to the exchequer from 2006 to 2010.
In separate findings, CAG said adjustment of one-time entry fee paid by telecom companies, whose licences were quashed by the Supreme Court, against the spectrum price they paid in 2012-13 deprived national exchequer of Rs 5,476.3 crore (Rs 54.76 billion).
Telecom Minister Ravi Shankar Prasad on his part said the special audit of the operators book would be ordered for three years -- 2009-10 to 2010-11, to find if there is any outstanding due on them.
Meanwhile, reacting to the CAG report, telecom industry bodies COAI and AUSPI in a joint statement said the matters relating to interpretation of Gross Revenue/Adjusted Gross Revenue of telecom companies for the purpose of calculation of license fees are under litigation in various judicial forums including the TDSAT, High Courts and the Supreme Court.
"The issues pointed out by the CAG pertain to those disputes, which have either been settled or stayed by various courts. Further, we would like to reiterate that our member companies follow the highest standards of corporate governance and have always been in compliance with all regulations," the statement added.
The CAG report has been much awaited as operators had been resisting auditing of their books since 2009 and had moved different courts to challenge mandate of the official auditor.
It was only after Supreme Court settled the issue in favour of the CAG in April 2014 that they were compelled to share info.
The auditor reported instances of under reporting of revenue due to netting off of discounts/waivers granted to post-paid subscribers and under-invoicing of roaming revenue due to set-off of inter-operator traffic discounts paid to other operators.
Also, there was under reporting of revenue from infrastructure sharing with other telecom operators as well as from forex gain.
The financial impact due to understatement of AGR stood at Rs 3,728.54 crore for Reliance Communications, Rs 3,215.39 crore for Tata Teleservices, Airtel (Rs 2,651.89 crore), Vodafone (Rs 1,665.39 crore), Idea (Rs 964.89 crore) and Aircel (Rs 262.83 crore), the CAG said.
"Though the CAG report will go to public accounts committee, whose recommendations will be final after approval by the house, yet the department will take a special audit which is authorised under the licence conditions to discover whether any outstanding due is legitimately required to be paid by the operators," Telecom Minister Ravi Shankar Prasad said.
The CAG presented its report on sharing of revenue by private telecom service providers (PSPs) in Parliament on Friday. "Verification of records of six PSPs indicated total understatement of AGR of Rs 46,045.75 crore (Rs 460.45 billion) for the period from 2006-07 to 2009-10," CAG said.
It added that government was deprived of a total revenue of Rs 12,488.93 crore on account of short/non-payment of licence fee of Rs 3,752.37 crore, spectrum usage charge of Rs 1,460.23 crore and interest of Rs 7,276.33 crore due from the six PSPs for the reported period.
CAG said the operators have understated the AGR by the amount of commission paid to their dealers, by promotional schemes like free talk time, by netting-off discounts from revenue pertaining to roaming services and infrastructure sharing.
The operators have also understated AGR by non-inclusion of interest income and profit from sale of investment. The companies have understated AGR for computation of SUC among others.
The CAG also flagged discrepancies in assessment of revenue share by DoT and non-existence of appellate mechanism leading to high number of litigations.
"Audit found that even after 16 years of the introduction of the revenue share regime, the correctness and completeness of revenue flowing into the consolidated fund of India could not be assured by DoT," CAG said.
The report contains significant findings on correctness and completeness of revenue share paid to the government by Bharti Airtel, Vodafone India, Reliance Communications, Idea Cellular, Tata Teleservices and Aircel along with their subsidiaries for the period from 2006-07 to 2009-10.
In a separate report, CAG said DoT provided set-off of Rs 1,658.57 crore (Rs 16.58 billion) to Telewings Communications Services (TCSPL), now Telenor, Rs 1,626.32 crore (Rs 16.26 billion) to Sistema Shyam Teleservices (SSTL), Rs 1,506.82 crore (Rs 15.06 billion) to Videocon Telecom and Rs 684.59 crore (Rs 6.84 billion) to Idea Cellular following decision of Empowered Group of Ministers (EGoM) in 2012-13.