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BHARTI AIRTEL ANNUAL REPORT 2011-12
c) Access charges (Interconnect Usage Charges)/Port charges
Interconnect charges are based on the Interconnect Usage Charges (IUC) agreements between the operators although the
IUC rates are governed by the IUC guidelines issued by TRAI. BSNL has raised a demand requiring the Company to pay the
interconnect charges at the rates contrary to the guidelines issued by TRAI. The Company filed a petition against that
demand with the Telecom Disputes Settlement and Appellate Tribunal (‘TDSAT’) which passed a status quo order, stating
that only the admitted amounts based on the guidelines would need to be paid by the Company.
Based on the Company’s evaluation and legal advice, it believes that it is not probable that the claim will materialise and
therefore, no provision has been recognised. Accordingly, no amounts have been accrued although some have been paid
under protest.
In another proceeding with respect to Distance Based Carriage Charges, the Hon’ble TDSAT in its order dated May 21, 2010,
allowed BSNL appeal praying to recover distance based carriage charges. On filing of appeal by the Telecom Operators,
Hon’ble Supreme Court asked the Telecom Operators to furnish details of distance-based carriage charges owed by them
to BSNL. Further, in a subsequent hearing held on Aug 30, 2010, Hon’ble Supreme Court sought the quantum of amount
in dispute from all the operators as well as BSNL and directed both BSNL and Private telecom operators to furnish Call
Data Records (CDRs) to TRAI. The CDRs have been furnished to TRAI. Based on the Company’s evaluation and legal advice,
it believes that it is not probable that the claim will materialise and therefore, no provision has been recognised.
In another issue with respect to Port Charges, in 2001, TRAI had prescribed slab based rate of port charges payable by
private operators which were subsequently reduced in the year 2007 by TRAI. On BSNL’s appeal, TDSAT passed it’s
judgment in favour of BSNL, and held that the pre-2007 rates shall be applicable prospectively from 29th May 2010. Based
on the Company’s evaluation and legal advice, it believes that it is not probable that the claim will materialise and
therefore, no provision has been recognised.
d) Customs Duty
The custom authorities, in some states, demanded ` 3,083 Mn as of March 31, 2012 (` 2,642 Mn as of March 31, 2011) for the
imports of special software on the ground that this would form part of the hardware along with which the same has been
imported. The view of the Company is that such imports should not be subject to any custom duty as it would be operating
software exempt from any custom duty. Based on the Company’s evaluation, it believes that it is not probable that the claim
will materialise and therefore, no provision has been recognised.
e) Entry Tax
In certain states, an entry tax is levied on receipt of material from outside the state. This position has been challenged by
the Company in the respective states, on the grounds that the specific entry tax is ultra vires the Constitution. Classification
issues have been raised, whereby, in view of the Company, the material proposed to be taxed is not covered under the
specific category. Based on the Company’s evaluation, it believes that it is not probable that the claim will materialise and
therefore, no provision has been recognised. The amount under dispute as of March 31, 2012 is ` 4,293 Mn (` 3,872 Mn as
of March 31, 2011).
f) DoT Demands
i. The Company has not been able to meet its roll out obligations fully due to certain non-controllable factors like
Telecommunication Engineering Center testing, Standing Advisory Committee of Radio Frequency Allocations clearance,
non availability of spectrum, etc. The Company has received show cause notices from DoT for 14 of its circles for
non-fulfillment of its roll out obligations and these have been replied to. DoT has reviewed and revised the criteria and
there has been no further development on this matter since then.
ii. DoT demands include demands raised for contentious matters relating to computation of license fees and spectrum
charges.
iii. DoT demands also include the following contentious matters:-
a. In respect of subscriber verification norms and regulations including validity of certain documents allowed as Proof
of Address/Identity in a mobility circle.