Indian telcos accused of misreporting revenue

Dylan Bushell-Embling
06 Oct 2011

India's department of telecom is now leaning on operators on multiple fronts, after drawing up notices to five major operators alleging misreporting of revenue.

The DoT plans to issue the notices after auditors allegedly discovered that telcos including incumbent Bharti Airtel have been shirking higher license fees by misreporting their income, WSJsaid.

The notices, which will also be sent to Reliance Communications, Idea Cellular, Tata Teleservices and Vodafone Essar, will ask operators pay license fees based on the revenue calculated by the Comptroller and Auditor General of India (CAG).

License fees in India typically range between 6% and 10% of revenues, depending on the service involved and the area in question.

The decision stems from a 2009 CAG audit looking into whether the operators were disguising mobile service revenue as income from services which command lower license fees. All five of the operators have previously denied any misreporting of revenue.

The planned move by the DoT comes shortly after the government made new threats to start to revoke telecom licenses issued to certain operators, alleging that they had missed their rollout obligations. Vodafone Essar Spacetel was a recipient, but none of the other audited companies, nor Vodafone the parent, were.

The ministry is also involved in a high-stakes dispute with Qualcomm over a BWA license the chipmaker had been intending to use for a TD-LTE network.

The government rejected Qualcomm's application for the license it paid around $1 billion for, but Qualcomm has appealed the decision and won an injunction on the government reallocating the disputed spectrum while the case is heard.

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