Telecom operators have to pay a certain percentage of their annual revenue as spectrum fee to the Government. This is over and above one-time licence fee they pay when spectrum is allotted to them. Both the Operators and the department of telecommunications (DoT) are at loggerhead over the issue of what constitutes AGR.

Telecom operators want that they should pay licence fee only on the revenue earned from operating services. For example, if a Telco gives a part of its office building on rent, then the government should not charge any revenue share on this income. It seems to be a fair demand by the Telcos. However, DoT has rejected this demand saying that it would be difficult to segregate revenues earned from core operations and from the rent.

Rent is just one example. Basically, the DoT wants that AGR should include all revenue earned by a service provider, including from corporate receipts, sale of handsets, real estate transactions and interest earned from bank deposits. Its argument is that there would be leakage if a telco starts segregating revenue from different sources. Telecom operators want that only the revenue earned by selling core telecom services where spectrum is used should constitute AGR.

CAG does not have much role in exposing under reporting of revenue. It was an ongoing issue between DoT and the telecom operators. DoT had already asked Telcos to pay licence fee on total AGR. As a result the operators went to the court and currently the matter is in litigation. Interestingly, both DoT and the Operators have gone to the Supreme Court over latest ruling of TDSAT on this issue.

So, it is clear that the Congress party exposed the so called scam without even going to the genesis of under reporting. In the process it did not achieve much. The government promptly clarified that it has initiated the process of recovering dues from six operators – Bharti, Vodafone, Aircel, RCOM, Tata Teleservices, and Idea Cellular. The total shortfall is Rs 5000 crore of License Fee and Spectrum Usage Charge and Rs 7000 crore of interest.

It is more important to define AGR such that it is acceptable to both Operators and the department and settle this issue once for all.