Five India telcos face $300m in fines for understating revenue

Melissa Chua
04 Jan 2012

Five mobile carriers in India face the prospect of fines totaling 1,593 crore ($300 million) for under reporting revenue to the government between 2006 and 2008.

According to the Economic Times, Reliance Communications will have to pay the most in fines - 551 crore, while Bharti Airtel will pay 292 crore. Tata Teleservices, Vodafone India and Idea Cellular will foot 273 crore, 254 crore and 120 crore respectively.

The alleged understatements led to the firms paying lower revenue share fees to the government. Laws dictate the companies pay 6-10% of annual revenue to the government as license fees, with 2-6% of annual revenue as spectrum usage charges.

The purported misdemeanors had been discovered after special audits commissioned by the government found discrepancies in the carriers’ annual revenue reports.

India’s Department of Telecom is expected to issue show cause notices to the firms after getting approval from communications ministers Kapil Sibal, who is expected to give consent January 13. The country’s law ministry had earlier voiced no objections to the show cause notices, stating its vetting of the notices was not needed.

All operators contacted by the Economic Times declined comment on the issue, with many pointing to earlier statements which insisted their books were in compliance.

An Economic Times source from one of the firms said Sibal had assured the industry that penalties would only be imposed after operators had made their counter arguments.

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