Bharti Airtel's revenue reporting on its national long distance licence has now come under the scanner of the Central Vigilance Commission. The CVC has asked the Department of Telecommunications to investigate whether the company had misrepresented revenues under its long-distance licence in order to pay a lower revenue share to the government.

The department has also been asked to probe whether any DoT or Telecom Regulatory Authority of India officials were conniving with the company in the matter.

The CVC's move follows a complaint by a member of parliament, Ajay Chakraborty, who alleged that the government may have lost over Rs100 crore a year from the ''anti-competitive practice of Bharti in long distance carriage''. The CVC has asked DoT to submit a report by 9 June.

Chakraborty had alleged that Bharti Airtel was charging more from smaller telecom companies, who used its network to route their traffic, resulting in gains for the company, and that it did not share revenues from these gains with the government.

A Bharti spokesperson said, ''As a responsible corporate, following the highest standards of corporate governance, Bharti Airtel strictly adheres to the regulatory requirements and processes. We have already provided the relevant information regarding the matter to both TRAI and DoT and will be happy to provide further details in case the same is required. Our carriage charges for the NLD business are well within the ceiling provided by the authority and are as per market practice and non-discriminatory.''

Last year, TRAI had noted a significant shift in Bharti's revenues from the long distance segment. Under the existing policy, the long distance segment attracts only 6 per cent licence fee, as against up to 10 per cent of aggregate gross revenue (AGR) in the case of mobile services. Through this practice, telecom companies have been paying much less than what they had to, leading to a loss of revenue to the government.

While the DoT has already ordered a special audit of Bharti Airtel on this issue, the CVC will look into charges of irregularities against DoT officials.
Meanwhile, DoT is already investigating allegations of improper revenue reporting by other large players including Reliance Communications, Vodafone and Idea Cellular, according to a Moneycontrol report.

The CVC had earlier sought a similar investigation into RCom's accounts after it was alleged that the company had shown income from non-voice revenues under its Internet services licence to take advantage of the lower revenue share payable to the government.

Creative accounting
Large integrated players are increasingly using differential licence fee to pay lower revenue share to the government. These companies are saving on the net outgo to the government by loading higher revenue component to the licence with lower revenue share. For example, Bharti had increased its long distance carriage charge from 25 paise a minute to around 60 paise.

This means that if STD rates are at Rs1.50 a minute, Bharti is passing on almost 45 per cent of the revenues on to its long distance arm, compared to just 10 per cent earlier.

The company also does not have to pay spectrum charges on the long distance revenue, while it has to pay about two per cent of the revenues from cellular services.