Telecom stocks yet again in the limelight

Telecom stocks are back in the news, of course with a negative publicity yet again. The Congress party has charged Modi government with an overwhelming Rs 45000 crores telecom scam. The allegations are put forth just before the monsoon session of Parliament where passing of GST bill may be the focal point.

The government is alleged to secretly protect the leading telecom companies which owe money to public exchequer.  The telecom companies had failed to report their income and had adopted non-uniform method of accounting. The companies also failed to follow the mandate of paying outstanding license fees and spectrum usage charges.

Government trashed the charges as the audit report prepared by Comptroller and Auditor General (CAG) on the revenues of the six telecom companies belonged to UPA period from July 2006 to October 2009.  Instead Modi government has actively initiated the recovery process. Modi government had asked for re-evaluation of the numbers from the telecom ministry taking few CAs to work on the same. However, the step by government is considered by few as the purposeful delay in the recovery process.

The actual amount of scam accounts to Rs 46045.75 crores and DOT (department of telecom) had received the documents screened under CAG, which are being examined thoroughly.  The six companies having operations in 22 license areas have been asked for four financial years' data.

The six operators were Bharti Airtel, Vodafone, Reliance Communications, IDEA, Tata and Aircel. Frontline stocks like IDEA, Bharti Airtel and Infratel dragged the Nifty downwards by falling more than 2 per cent each. RCom fell 3.5 per cent.