Telecom operators to move SC against audit by CAG

India's telecom services providers have virtually united to move the Supreme Court asking it to overturn an earlier decision of the Delhi the High Court that the Comptroller & Auditor General of India (CAG) is within his rights to audit their books.

The Association of Unified Telecom Service Providers of India, which represents telecom companies operating on the CDMA platform including Reliance Communications and Tata Teleservices, said the High Court order was against the telecom licence conditions.

The Cellular Operators' Association of India, which represents the CDMA operators like Bharti Airtel, Vodafone India and Idea Cellular who dominate the Indian telecom space, said it will soon file a similar petition opposing the government auditor's right to inspect its books.

''Merely because an entity is required to maintain accounts of its own transactions from which sums due to the government can be computed, the accounts of such an entity do not become the accounts of the government,'' the AUSPI said in its filing.

''The high court order goes against the existing laws that govern the telecom industry. The CAG does not have authority over private players,'' AUSPI president C S Rao told newspersons in Delhi today.

The CAG had initiated an audit of telecom companies audit after the Telecom Regulatory Authority of India (TRAI) alleged that some operators were under-reporting income to avoid paying a due revenue share to the government. The telecom companies approached the Delhi High Court seeking a stay on the CAG's action.

But the high court on 6 January ruled that there is no doubt about the CAG's constitutional power to look into all forms of income derived by the government; although it added that where accounts of telecom companies were concerned, the CAG audit has to pertain to revenues and not aspects such as ''wisdom and economy in expenditures''.

The case goes back to 2009 when the department of telecommunications (DoT), which is directly controlled by the telecom ministry, hired CAG-empanelled auditors to look into the books of Bharti Airtel Ltd, Vodafone India Ltd, Idea Cellular Ltd and Reliance Communications Ltd for the years 2006-07 and 2007-08.

The CAG auditors found that these companies had under-reported revenues by more than Rs10,000 crore for the two financial years. On the basis of these audits, DoT in June 2012 issued notices to recover almost Rs1,600 crore in unpaid dues from the five companies.

Private telecom companies operating in India pay 6-10 per cent of their annual revenue as licence fee and another 2-6 per cent as spectrum usage charges.