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Saturday, 09 July 2016 02:49
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Nearly 15 year later, no clarity on what revenue is


Given how the UPA’s telecom minister Kapil Sibal reduced the CAG’s Rs 1.76 lakh crore loss figure from the A Raja scam to zero-loss, it is a bit rich to find the sameCongress party citing a CAG report to argue prime minister Narendra Modi is trying to cover up a Rs 46,000 crore telecom scam. In February 2016, the CAG talked of how leading telcos had under-paid spectrum charges and license fees—though the NDA had given this report to a committee to study, stung by the Congress allegations, it immediately issued a press note saying that notices would be sent to all the telcos and, along with penalties, no effort would be spared to recover the money. What this ignores, however, is that 14 years after the dispute first arose, there is still no clarity on what should be included/excluded from telecom ‘revenues’—and since there is no clarity, whichever way the case is finally decided, where is the question of paying a penalty? Should a foreign exchange gain/loss a Bharti Airtel makes on its African operations be included in this or not? In the initial years, Vodafone operated in India through eight companies which, on occasion, lent money to one another—is this to be included in telecom ‘revenue’ and should the government be given a share of this? Clearly not, you’d think, but that is what the case is all about.

In 2007, TDSAT ruled against the government which then appealed this in the Supreme Court. Since, by then, the TDSAT had asked Trai for its suggestions and the report was submitted, SC dismissed the case and asked all parties to approach the TDSAT. When the government didn’t get its way at the TDSAT, it once again went to SC which gave a ruling that confused matters further. SC said that while the TDSAT could not decide on whether the terms and conditions of the license were valid, it was free to decide on any dispute based on the interpretations of these conditions. With matters back with TDSAT, expectedly, most parties went to various courts. Meanwhile, Trai came out with its recommendations on what revenue was!

While the new telecom minister can take a call on the CAG report once a decision is taken on what ‘revenue’ is, the decision has larger ramifications. Not including foreign exchange losses, capital gains, or interest earnings on company deposits in ‘revenue’ is an easy decision. But if payments made to other telcos are included in revenue and the government gets license/spectrum fees on this, this will discourage infrastructure sharing; it will also ensure MVNOs never take off.  In the rush to apportion blame, no one is talking about the real issue.


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