DoT appoints auditor to scrutinize RCom books

NEW DELHI, INDIA: In the backdrop of the Satyam Computer Services fraud that has tarnished India's corporate image, the Department of Telecom has reportedly appointed Parekh & Co to scrutinize financial books of Reliance Communications (RCom).

While five auditing firms were shortlisted, the DoT has approved the appointment of Parekh & Co to audit RCom’s accounts for 2007-08, said media reports.

The compensation paid to the auditor will have to be borne by the company. The DoT move follows the allegation that Anil Ambani promoted RCom was separating its revenues generated from mobile services and data services to give lower revenue share to the Government.

The company had provided two different versions of its financial performance to Trai and to investors, it is said. While operators do not have to pay any revenue share for income earned from Internet services, they have to pay between 6 per cent and 10 per cent of their annual revenue from mobile services to the Government.

However, RCom refuted the allegations and said this was due to different reporting requirements of the regulator and the stock exchanges.

The issue had come to light after the Cellular Operators’ Association of India had pointed out to the Government that RCom was showing its income from non-voice services under the Internet licence even though the facility was being provided through the cellular network.