Bharti Airtel’s accounts come under watchdog scanner

March 28th, 2009 - 7:17 pm ICT by IANS  

By Pupul Dutta
New Delhi, March 28 (IANS) The Department of Telecommunications has proposed a special audit into the accounts of leading telecom operator Bharti Airtel as the regulator has raised doubts that the company may be shifting revenues from one source to another, resulting in lower fee to the government.

The matter was brought to light by the Telecom Regulatory Authority of India (TRAI) that said while revenues from long-distance telephony for Bharti had shown “exceptional growth”, the same was not true in the case of mobile telephony segment.

Long-distance telephony attracts a lower licence fee of 6 percent, compared with 6-10 percent for universal access service licence or cellular mobile telephone service.

The telecom service industry contributes Rs.12,000 crore ($2.4 billion) to the national exchequer by way of licence fee and spectrum charges on a revenue-sharing basis.

“It will not be out of place to mention here that TRAI has raised a doubt that the licenced company is shifting the revenue of mobile segment to long-distance segment,” said an internal note, calling for a special audit to clear the doubt.

Reacting to the call for a special audit, a spokesperson for Bharti said the company will cooperate with the authorities in every possible manner. “Bharti has always believed in good corporate governance and this matter should be resolved soon,” he said.

To be fair to Bharti, the internal note also said since the licenced company was required to provide information on revenue figures alone and not on the earnings before income tax, depreciation and amortisation, it was not possible to arrive at a meaningful conclusion.

“The issues raised by TRAI only mention the trend without leading to any conclusion. There is no quantification of the exact extent of shifting of revenue,” said the note, suggesting that the watchdog also conducts further research and informs accordingly.

“The special auditors so appointed shall check the accounts of the operator with reference to the scope of the licence and verify the trends of comparative growth of revenue in various segments, as pointed out by TRAI.”

The letter from the watchdog, based on which the govrnment is contemplating a special audit on Bharti, also says that some other leading integrated telecom service providers were also not providing relevant financial information.

“It is felt that the finalising of reconciliation statement with break-up of stand-alone revenue of the operator with consolidated revenue of group companies in the sector may also be introduced,” said the watchdog’s letter.

Several members of parliament had written to Communications Minister A. Raja in the past on potential revenue loss to the exchequer by private telecom operators like Bharti Airtel, Vodafone, Idea and Aircel.

“I am having the matter looked into,” Raja had said in his reply to one of the lawmakers.

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