TRAI asks ministry to examine Bharti Airtel’s earnings

24 Feb 2009

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.

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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