Private telecom operators understated revenues, not fulfilled rollout obligations

The Telecom department plans to impose penalties on five mobile telephone companies for understating their revenues for the years 2006-07 and 2007-08, for paying lower license fee to the Government.

The DoT estimated that the penalty to be paid by these private telecom operators is—Reliance Communications=Rs 551 crore; Bharti Airteel=Rs 292 crore; Vodafone=Rs 254 crore; Idea Cellular=Rs 113 crore; Tata Teleservices=Rs 273 crore; and Tata Communications=Rs 120 crore.

The telecom services companies have to pay 6 to 10% of their revenue as annual license fee and 2 to 6% of their revenue as spectrum usage charge to the Government. By reporting a lower revenue than what actually they have earned, they paid a lower license fee and spectrum charge to the Government.

The show cause notices to these five private operators will be issued most likely after 13^th January 2012. While the private telecom operators earlier stated that their account books were correct and nothing wrong was there, the DoT got the go ahead from the law ministry after sending the draft notices to it.

The DoT is also likely to issue notices soon to Idea Cellular for terminating their services in 6 circles(service areas)—Punjab, Maharashtra, Karnataka, AP, Haryana and  Delhi.

Last year the TRAI recommended cancellation of the licenses of Idea in Karnataka and Punjab circles and the licenses of Spice in Maharashtra, Delhi, Haryana and AP for missing the rollout obligations.  Idea bought Spice in 2008.

(News published in “The Economic Times”)