A draft Comptroller and Auditor General (CAG) report has stated that Bharti Airtel received undue benefits of about Rs 145 billion by miscalculating its revenues.

According to the report, Bharti Airtel and its subsidiary, Bharti Hexacom, registered significant abnormal gains in the period between 2006-07 and 2009-10 by under reporting the revenues and through corporate restructuring.

The report has estimated a gain of above Rs 440 billion to the operator on account of corporate restructuring.  The report has also stated that Bharti Airtel successively transferred infrastructure assets to its subsidiaries at zero value. Bharti Airtel and Bharti Hexacom have been estimated to secure financial benefits of Rs 109.8 billion through investment revaluation and Rs 336.18 billion through changes in the market value of shares received.

The report has also noted that Bharti Airtel under-reported its revenues and license fee in the company's primary books of accounts (trial balances) and profit and loss (P&L) account, especially the revenues earned from providing pre-paid, post-paid and roaming services, foreign exchange deals and infrastructure sharing. The operator also suppressed income from investments, interest and miscellaneous sources in calculating adjusted gross revenues (AGR) while computing license fees (LF) and spectrum usage charges (SUC). The LF and SUC were not paid on the total amount deducted from revenue on account of commission/margin to the distributor/agents/franchisee/dealer, which stood at around Rs 10.71 billion. Further, about Rs 6.11 billion was deducted on account of free airtime.

These issues, along with others, have led to a total miscalculation of revenues at about Rs 145 billion.

The draft report has not incorporated the views of the Department of Telecommunications (DoT). Once the CAG draft report is finalised, it will be tabled in Parliament.