Bharti Airtel made an undue gain of ₹499 crore because of Department of Telecom’s decision to merge Chennai telecom circle with Tamil Nadu in a hasteful manner in 2005, the Comptroller and Auditor General said.

“Merger of Chennai Metro and Tamil Nadu telecom circles without any cost benefit analysis of the proposal in 2005 for the CMTS/UAS (full fledge telecom operators) licence resulted in undue benefits to the select telecom operators,” CAG said in a report.

The order issued in September 2005 allowed merger of licences and the period of permits was allowed to be fixed as per the date of licence among the two having longer validity.

“The issue of extension of the licence was neither examined nor proposed in the note put up for approval of the competent authority on August 12, 2005 by the officials of DoT but later on included in the office order issued on September 15, 2005,” the CAG said.

The CAG said the cost benefit analysis of the proposal for extension of effective date of licence period due to merger of licences had not been done though decision and this had bearing on government revenues due to extension of effective date of licence.

The auditor said “the same was effected without levying any additional fee. This resulted in undue benefit to Bharti Airtel to the tune of ₹499.35 crore whose UAS licence for Chennai SA was extended from November 2014 to September 2021.” It added that service area merger order stipulated that licence fee of the merged Tamil Nadu service area would be 10 per cent of adjusted gross revenue.

However, for the licencees who were paying fee at the rate 8 per cent in TN service area, the licence fee was fixed to 9 per cent instead of 10 per cent for the period from October 1, 2005 to March 31, 2008.

“The financial implication due to this reduction of licence fee was calculated by value added service wing of DoT as ₹3-5 crore annually, but details of which were not available on record,” the CAG said.

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