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The CAG investigates the accounting of Airtel Digital TV, Tata Play, Dish TV, and Sun Direct 2022

The CAG investigates the accounting of Airtel Digital TV, Tata Play, Dish TV, and Sun Direct 2022

The Auditor General and Comptroller (CAG) of India is looking into the direct-to-home (DTH) telecom operators Tata Play, Airtel Digital Television, Sun Direct, and Dish TV, according to the Economic Times. According to the article, the Center has requested a special investigation of these providers in relation to the long-running license fee dispute.

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According to the Economic Times story, the Union Ministry of Information (I&B) wrote to the CAG of India requesting a thorough audit of all these DTH providers dating back to the year of their founding or the date the government granted them a license.

It continues by saying that the action was taken because some inconsistencies in these companies’ revenue calculations had been suspected.

To make sure that now the amount given to the national government as a licensing fee is accurately assessed and paid, according to the report, the I&B ministry asked CAG to undertake this particular audit. This development follows the DTH service provider’s request for a licensing fee remission in May, which they justified by claiming a reduction in subscribers over time. The audit will include Videocon’s D2H TV and Big TV/Independent TV, according to the report.

tata play: airtel digital tv, tata play, dish tv and sun direct's accounting under cag scrutiny - the economic times

These DTH providers are required to pay the Center a part of their income as license costs; a waiver of these fees was requested as been called out before.

The report states that this sum is fixed at 8% of the company’s yearly gross income, shown in its audited statements. According to the research, it is expected that in FY23, income from the DTH license fee, broadcast Television programs, FM radio, etc., will surpass Rs 1,000 crore.

Additionally, there is DD Free Dish. However, it is a government-run organization. The DTH providers must pay licensing costs to the center out of their earnings in order to maintain their license. The license is established at 8% of gross revenues for the year. However, there are worries among government officials that the DTH operators’ reported revenues have been declining and aren’t at the projected levels.

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DTH operators applied for a license cost relief in May due to their aging subscriber base. The revenue of the DTH providers has suffered due to factors including the introduction of streaming services. The national government granted six DTH licenses between 2003 and 2007. However, only four operators are active: Tata Play, Dish TV, Airtel Digital TV, and Sun Direct.

What has taken place thus far?

The Auditor and Comptroller General (CAG) of India were requested in a letter from the Union Information and Broadcasting Ministry this week to thoroughly assess all DTH providers dating back to the year they were established or granted licenses by the government. The action reportedly results from suspicions of errors in DTH service providers’ revenue calculations.

tata play, airtel digital tv, sun direct and dish tv's accounting under scrutiny: report

In order to make sure that the amount provided to the national government because the license fee is “properly assessed and collected,” the I&B ministry has consequently requested that the CAG undertake a special audit.

What is the history of this whole situation?

DTH providers requested a license fee exemption in May, noting a drop in customers over time caused, among other things, by the emergence of streaming services. Between 2003 and 2007, the Center issued six DTH licenses.

Additionally, there has been litigation about the long-running license fee problem. The I&B ministry issued a Rs 4,164 crores notice to the Essel Group, which owns Dish TV, in December 2020, demanding payment of license costs and interest accrued since the company’s founding in 2003.

What percentage of the revenue must these businesses fork over?

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They must pay 8% of the company’s annual gross sales, as shown in the audited records.

What are the concerns of the government?

Government officials are reportedly concerned that the revenue estimations reported by different operators have been declining and aren’t at expected levels.

How many people are using these services?

The four competitors, including the government-owned Doordarshan-run DD Free Dish, which provides free DTH, have a combined subscriber base of more than 68 million. DTH service providers are needed to give the Center a part of their revenue through license fees.

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It is crucial to remember that the central government must receive 8% of the DTH service providers’ annual gross revenue in the form of licensing fees.

The Center, between 2003 and 2007, gave six DTH licenses. However, only four DTH providers—Airtel Digital Television, Tata Play, Dish TV, and Sun Direct—are now providing services globally; the other two businesses have stopped doing so.

The I&B ministry has examined the DTH companies’ license payments. The ministry served Essel Group, which owns Dish TV, with a notice in 2020 requesting payment of license costs and interest accrued since the DTH operator’s founding, totaling INR 4,164 Cr (2003).

Edited by Prakriti Arora

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