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Corporate Feb 14, 2013

Vodafone gets Rs 995 cr spectrum charge notice from DoT

By Sindhu Bhattacharya

New Delhi: Vodafone India has been slapped with an almost Rs 995 crore notice by the Department of Telecom for not paying all the spectrum charges which were due for for years between 2008-09 and 2011-12.

The notice is dated 5 February and clearly states that the company needs to pay up the arrears within 15 days, which means by 20 February, failing which action would be taken "in terms of license agreement".

A Vodafone spokesperson declined to comment on the matter. But the four separate notices, copies of which are available with Firstpost, reveal that as per DoT's calculations, Vodafone has to pay up roughly Rs 14.8 crore in spectrum charges, penalties and interest for 2008-09, Rs 12.25 lakh for 2009-10, Rs 731 crore for 2010-11 and Rs 132 crore for 2011-12.

Spectrum trouble for Vodafone. Reuters

Spectrum trouble for Vodafone. Reuters

Unconfirmed reports suggest that the DoT has not singled out Vodafone but sent similar notices to other GSM operators and the total sum DoT is looking to recover from all telcos is about Rs 4,000 crore, but this could not be independently confirmed.

The demand notice follows a special audit that DoT has been conducting on the books of telecom operators, checking out if there has been any under reporting of gross revenues (AGR) which is the basis for calculating spectrum charges.

In the past, there have been instances when the DoT and telcos have disagreed on what all constitutes AGR, with DoT insisting that even seemingly insignificant revenue generators such as scrap sale and rentals be included in the calculation. AGR is adjusted for revenue that does not accrue directly to telecom companies such as service tax and interconnection charges.

A story in Mail Today on 28 January referred to the special audit being conducted by DoT for Bharti Airtel, Vodafone, Reliance Communications, Idea Cellular and Tata Teleservices. The same story said that an audit of Vodafone's books has revealed that the company paid less revenue to government in terms of adjusted gross revenue (AGR). The auditor, SK Mehta and Company, had detected many irregularities in the books of the company, this story said.

"The audit found that certain items like interest income and forex gains were excluded while calculating AGR." Telecom companies pay a fixed fees as AGR to the government under a revenue sharing agreement. Mobile telephony attracts a licence fee of 6-10 per cent while NLD, ILD, ISP and Internet Protocol attract six per cent levy, the Mail Today story said.

In 2009, DoT began a special audit of the books of five telecom companies since the revenue sharing arrangement was based on self-assessment. The audits were recommended by the Telecom Regulatory Authority of India (Trai) after the government received a number of complaints that telecom firms were fudging their books to pay lower revenue share.

by Sindhu Bhattacharya

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