A spectrum of scams
As if there weren’t enough scams tainting the no-longer lilywhite reputation of Prime Minister Manmohan Singh’s UPA-II government, we now have a second spectrum scam that threatens to dwarf the one that just paralysed the entire winter session of Parliament. This all-new ‘S-Band’ scam involves the Indian Space Research Organisation’s (ISRO’s) commercial arm, called the Antrix Corporation Ltd, and a company called Devas Multimedia Pvt Ltd, run by a former ISRO insider.
The deal was that ISRO launches two satellites for Devas. But the sweetener was a massive ‘free’ benefit – unrestricted use of 70 MHz of the scarce S-band spectrum over a 20-year period. Also known as 2.5 Ghz band, the S-band is used for fourth generation technologies like WiMax and Long Term Evolution (LTE). ISRO comes under the Department of Space (DoS), which is directly in the Prime Minister’s charge.
Just to put things in perspective, last year the central government got around Rs67,719 crore by auctioning 15 Mhz of spectrum for 3G mobile services. Government-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) leased 20 MHz of S-Band broadband spectrum, and had to pay Rs12,847 crore for it. But Devas is getting access to 70 Mhz of spectrum in the same band for just over Rs1,000 crore!
If that is not a scam, what is?
The newspaper ‘Business Line’ has reported that according to preliminary Comptroller and Auditor General (CAG) estimates, this ‘gift’ of spectrum could cause the public exchequer a loss of around Rs2 lakh crore, more than its estimate of Rs1.76 lakh crore as presumptive loss in the 2G spectrum scam.
Devas Multimedia is a company floated in 2004 by one Dr M G Chandrasekhar, its present Chairman, who was a former Scientific Secretary at ISRO and then Managing Director of the defunct satellite radio company WorldSpace. In 2008, Deutsche Telekom took a 17 per cent stake in Devas for about $75 million (Rs350 crore). Columbia Capital and Telcom Ventures have unspecified holdings in the company. Its board of directors includes former Nasscom President Kiran Karnik, former Verizon vice-chairman Larry Babio, and former XM Sirius Satellite Chairman Gary Parsons.
Under the contract with Devas Multimedia, ISRO must build and launch two satellites – GSAT-6 and GSAT-6A – for which it gets $40 million (Rs190 crore) as pre-launch capacity reservation and $250 million (Rs1,200 crore) for satellite capacity lease payments. Devas gets to use 10 transponders on each of the satellites, and Antrix would have earned $11 million (Rs53 crore) a year per satellite for 12 years. The two are to ‘share revenue’ after broadband services start, but the exact revenue share is not public. The company plans to invest $500 million to $750 million (Rs2,400 crore to Rs3,600 crore) once the service is launched.
The spectrum lease, for 20 years, is ‘included’ in the deal, for free. Originally the two satellites were to be launched from India in 2010. But the recent GSLV rocket disasters have delayed that. Now Devas is pushing ISRO to launch GSAT-6 through the European Arianespace, because the agreement has a penalty clause for delays. This may cause ISRO a loss.
It seems the agreement is loaded completely in favour of Devas Multimedia, and to ISRO’s disadvantage. The 70 MHz of spectrum is just ‘included’ in the deal, as if it is of negligible value. Unlike contracts ISRO has signed in the past, there are no restrictions on Devas Multimedia sub-leasing the spectrum to third parties. In fact, it all so closely resembles A Raja’s 2G scam, that they could be twins separated at birth. What is the government going to do about it?
