TRAI asks ministry to examine Bharti Airtel’s earnings
Telecom regulator Trai has asked the communications ministry to examine if Bharti Airtel is passing off mobile revenues as those earned through long-distance services (carrying STD and ISD calls).
By Joji Thomas Philip, ET Bureau |
NEW DELHI: Telecom regulator Trai has asked the communications ministry to examine if Bharti Airtel is passing off mobile revenues as those earned through long-distance services (carrying STD and ISD calls). Bharti, on its part, has denied any wrongdoing and said that it had already clarified and addressed all issues raised by the regulator on this front.
Long-distance service providers pay 6% of their annual revenues to the government and mobile service providers pay up to 14% of their annual revenues, depending on the area of operation. Trai fears that companies providing both services may be shifting a higher revenue component to their long-distance entities to reduce the amount they have to
pay the government.
ET had first reported in November 2008 that the regulator was probing the high share of STD, ISD earnings in telecom companies��� total revenue. So far, the regulator has not established if the significant increase in national long-distance revenues of some telcos is because of actual increase in the minutes of traffic, or if it is a case of passing off revenues from other streams.
In fact, late last year, Trai had taken up this issue with Bharti. The regulator had pointed out that according to Bharti���s quarterly June 2008 report, its ���long distance segment showed exceptional growth in revenue and EBITA margin although the minutes of usage did not register similar growth���.
Bharti had submitted a detailed reply following which the regulator in its communication to the Department of Telecom said: ���The reply of Bharti was further examined and it has been noted that there is a shift in revenues to the long distance segment, which attracts only 6% licence fee as against 6-10% in the case of other telecom operations.���
Industry sources said that all telecom companies are within the laws to rework their long-distance tariff structure and save on their net outgoes to the government. For instance, according to Trai norms, companies can charge up to 60 paise per minute for carrying an STD call.
Long-distance service providers pay 6% of their annual revenues to the government and mobile service providers pay up to 14% of their annual revenues, depending on the area of operation. Trai fears that companies providing both services may be shifting a higher revenue component to their long-distance entities to reduce the amount they have to
pay the government.
ET had first reported in November 2008 that the regulator was probing the high share of STD, ISD earnings in telecom companies��� total revenue. So far, the regulator has not established if the significant increase in national long-distance revenues of some telcos is because of actual increase in the minutes of traffic, or if it is a case of passing off revenues from other streams.
In fact, late last year, Trai had taken up this issue with Bharti. The regulator had pointed out that according to Bharti���s quarterly June 2008 report, its ���long distance segment showed exceptional growth in revenue and EBITA margin although the minutes of usage did not register similar growth���.
Bharti had submitted a detailed reply following which the regulator in its communication to the Department of Telecom said: ���The reply of Bharti was further examined and it has been noted that there is a shift in revenues to the long distance segment, which attracts only 6% licence fee as against 6-10% in the case of other telecom operations.���
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When contacted, the Bharti spokesperson said: ���In our letter to the regulator, we have already clarified the queries raised by them regarding the revenues and margins of our long-distance business and the mobile business. Our carriage charges for the NLD business are well within the ceiling provided by the authority.��� Industry sources said that all telecom companies are within the laws to rework their long-distance tariff structure and save on their net outgoes to the government. For instance, according to Trai norms, companies can charge up to 60 paise per minute for carrying an STD call.
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