There is bad news for mobile telecom operators. The director-general of audit (posts & telecommunications) has asked the Department of Telecommunications (DoT) to incorporate a clause in the licence conditions enabling the comptroller & auditor general (CAG) to audit the accounts of 3G and BWA service providers.

If this happens, the 3G players will be in for trouble. CAG is not an industry savvy auditor and has experience of audit and writing reports on government departments and PSUs.

In telecom, CAG will ascertain the correctness of the gross revenues of private operators. Earlier, it was alleged that mobile operators were under-reporting revenues, thereby short-changing the government of its rightful revenue share.

The audit department’s decision also provides a new twist to the growing battle between DoT and CAG on their respective jurisdictions in formulating and dictating telecom sector policy.

The director-general, in its communication, pointed out that with 3G services expected to be launched by private operators by the end of this year, there was need for an amendment to their licence conditions to also provide for rollout obligations and payment of additional spectrum charges. It also argued that the changes needed to be carried out so that there are no legal complications.

Telcos had earlier sought the Supreme Court’s intervention to halt a move by the government to ask CAG to scrutinise the accounts of 2G operators for any evidence of under-reporting. DoT had appointed independent auditors to look into the books of operators and their reports had been submitted. The Supreme Court declined to stay the CAG scrutiny.

The communication from the director-general was addressed to former DoT Secretary P J Thomas on September 3, just days before he was appointed the new central vigilance commissioner amidst a brewing controversy.