After duties collected from mobile operators fell sharply in 2017, India’s Department of Telecommunications (DoT) plans to carry out special audits to determine if the companies underreported their revenues, The Economic Times (ET) reported.
The audits will target all operators’ accounts for the past seven fiscal years dating back to 2011.
Revenue collected by the government in licence and spectrum usage fees fell 23 per cent year-on-year in 2017 and is expected to decline again this year, the newspaper said.
Indian operators are in the middle of a costly price war which sent revenue plummeting and hurt profitability. Bharti Airtel’s revenue in the April to June quarter dropped 13.3 per cent year-on-year to INR150.3 billion ($2.1 billion), while Idea Cellular’s consolidated revenue fell 28 per cent to INR58.9 billion during the same period.
Aircel, which filed for bankruptcy in March, received a notice about the pending audit and other operators will be informed soon, a DoT representative told ET.
In addition to declining revenue over the past two years, the industry is facing consolidation. Second- and third-ranked players Vodafone India and Idea recently merged to create the country’s largest operator by subscribers, while Airtel acquired Telenor India and is in the process of acquiring Tata Teleservices’ wireless business.
The DoT recently petitioned the country’s Supreme Court to approve nearly INR330 billion in financial guarantees from operators, claiming existing holdings are not sufficient to secure the huge outstanding amounts the industry owes the government in licence and spectrum usage fees.
Raising the amount operators need to hold as bank guarantees would add significantly to their financial stress.Subscribe to our daily newsletter Back