CAG slams DoT, seeks Rs 549cr penalty on Voda

NEW DELHI: The national auditor has come down heavily on the department of telecom (DoT) for providing 'undue benefit' of Rs 187 crore to Vodafone by not levying an 'enhanced' spectrum usage charge for using 3G spectrum in circles where it had not bought any. It has further rebuked the telecom department for not 'revoking' the operator's permits for illegally providing the 3G services in those 11 circles where it didn't buy spectrum but used it after entering into 3G intra-circle roaming pacts (3G ICR).

Consequently, the DG Post and Telecommunications, a unit of CAG in charge for audits pertaining to the telecom sector, has asked DoT to impose a penalty of Rs 549 crore on the operator in the draft audit report assessing whether the operators were duly paying the 'revenue share' to the government. The matter is currently sub judice in the Supreme Court.

This accusation is the latest in the series of allegations hurled by the Comptroller and Auditor General of India (CAG) at DoT, first being that it allowed a cartel of private operators to kill the 2G spectrum auctions. CAG then accused the telecom department for causing loss of thousands of crores by allowing 2G intra-circle roaming.

"Since the Vodafone group has been earning revenue using the spectrum allotted through a bidding process to another operator, the company should be made to pay as penalty a proportionate amount of the bid amount paid by a successful bidder, for the period of their use of 3G spectrum," the draft audit report on 3G ICR, a copy of which was reviewed by ET, concludes. This it has calculated at Rs 549 crore.

Vodafone which bought 3G spectrum only in 9 service areas in 2010 for Rs 11,617 crore was using the networks of Airtel and Idea in the remainder 11 service areas to provide 3G services. However, it continued to pay the SUC for the 3G spectrum only for circles it had bought the spectrum and not the additional 11 circles where it was using the spectrum bought by other operators.

In addition to the licence fee, the government imposes a cascading charge on operators for using spectrum. Termed as spectrum usage charge (SUC), it is levied on the net revenue earned by a mobile phone service provider, and varies between 3% and 8% depending upon the quantum of spectrum held by the operator. A 3% for the start-up amount of 4.4MHz of spectrum, it goes up till a maximum of 8% for spectrum between 12.2MHz and 15.2MHz.

CAG has premised that since Vodafone was earning revenue on the 3G spectrum of other operators in 11 service areas, without paying any spectrum usage charge. "As a result BSNL which had paid Rs 4,392 crore for winning the 3G licenses in these 11 circles suffered adversely as they had to pay enhanced rate of SUC," the draft report says.

The fresh penalty proposed, will be over an above Rs 550 crore the WPF wing of the DoT has imposed on Vodafone for breaching the licence conditions through 3G ICR.

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