Telecom minister Kapil Sibal may soon find himself in a soup over the S-band spectrum controversy. Sibal was a part of the space commission that cleared state run Antrix Corp's S-band spectrum deal with Devas Multimedia in 2005.

As the minister of science and technology, not only was Sibal the member of the commission, he was also a part of the cabinet that gave its approval for the deal.

It turns out that Sibal's note alongwith the cabinet nod sealed the deal which gave Devas, headed by a former Isro employee, 70 Mhz of the S-band spectrum at throwaway prices.

The cabinet secretary, then national security adviser (NSA) M K Narayanan (now West Bengal governor), and the then ISRO chairman G Madhavan Nair were the other members of the commission.

Even prime minister Manmohan Singh has made himself open to censure over the Devas deal as he not only chairs cabinet meetings that clear such deals, but he was also briefed by cabinet secretary K M Chandrasekhar last year on the need to cancel the deal, after the 3G auctions earned the government over Rs 1.06 lakh crores. The Devas deal earned the government a little over Rs 1,000 crores, paltryin comparision.

Singh heads the department of space (DoS) that failed to order the cancellation of the contract with the bangalore-based private firm headed by Isro's former scientific advisor Dr. M G Chandrasekhar. The law ministry, responding to a query by the cabinet secretary, had advised the government that Isro was within its right to cancel the deal signed on its behalf by its commercial wing, Antrix Corporation.

Sibal may also have to explain why the department of telecommunications (DoT) is sitting over a recommendation of the regulator Telecom Regulatory Authority of India (Trai) last May to allow review of the usage of the spectrum available with various government agencies. This Trai reasons, will enable it to schedule release of spectrum to the telecom sector for speedier rollout of the telecom and broadband services in the country.  DoT is the custodian of the spectrum or airwaves in India and an estimated 55 percent of the available 1,161 MHz spectrum is with the government agencies including DoS and defence ministry.

Though the government may act fast to scuttle the Devas contract to wriggle out of the direct charges levelled by the opposition on the prime minister over the scam, it cannot shut off the reality of Davos where, at the World Economic Forum, it hopes to attract investments from abroad. Telcos are likely to show interest in buying spectrum cheap and selling them at huge profits.

The catch in the Devas contract is that the company can offload the excess spectrum it has to others if it is not able to utilise all 70Mhz and there is bound to be a huge race among the private telecom operators to seize part of it instead of going to the DoT for access to more spectrum.

While Devas offloaded its 36,749 shares worth US $75 million to Singapore-based Deutsche Telekom Asia Pte Ltd, it also took other investors, many from the tax haven Mauritius that launders the Indians' black money received through hawala and plows it back in the name of the companies that can be easily registered there.

Two Mauritius-based companies -- CC/Devas (Mauritius) Ltd and Telecom Devas Mauritius Ltd were issued 15,730 convertible cumulative preferential shares each on March 16, 2006 at a huge premium of Rs 21,445.82 for the shares with equity value of Rs 10 each, only few months after the company got the scarce spectrum. These two Mauritius companies were further allotted 15,619 shares each in three tranches.

The balance sheet of Devas Multimedia shows that its capital shot up eight times in only three years from Rs 67.5 crores on March 31, 2007 to Rs 578.82 crores in 2010. In fact, the capital investment went up by Rs 123 crores in just one year between 2009 and 2010.  Since after allotment of the scarce S-band spectrum, that was once used by Doordarshan for serving remote areas through satellite, the company raised several hundred crores and even made investments in mutual funds and financial institutions.

An interesting alibi from Antrix  is that Isro was burdened with unused S-band spectrum that was vacated by Doordarshan and it readily agreed to give 70 MHz from it to Devas when it approached it. It argues that no other company had approached it, otherwise they too would have been given the spectrum instead of letting it lie idle.

Earlier reports:

S-band deal under review, says department of space

Isro leaves the matter up to DoS to comment, former chaiman denies knowledge of deal

Following media reports of the  comptroller and auditor general (CAG) investigation of the Antrix-Devas deal, the department of space (DoS) under the minsitry of sciences said on Tueday that it was already reviewing the deal and that the government will take appropriate steps to safeguard public interest.

The CAG, meanwhile clarified that its report was a preliminary one and that it was yet to make any "findings". It also stated that audit of certain activities of the DoS was under way.

However, the Indian Space Research Organisation (ISRO, whose commercial arm Antrix corp is a party in the deal), passed the busk on to the Dos on Moday, saying the matter was for the latter to review.

Former Isro chairman G Madhavan Nair denied any knowledge of the deal to the reporter of the English news channel Times Now, saying that spectrum allotment "was not Isro's job."

Now, a bigger, Rs 2 lakh crore spectrum scam hits the fan

Hindu Business Line reports that 70 MHz of scarce S-band quietly given away to a private company

The comptroller and auditor general (CAG) has turned its lens on another spectrum deal - between ISRO-arm Antrix and a private company Devas Multimedia - and this deal could have cost the country over Rs 2 lakh crore, a Business Line report says.

According to the report, the deal is ostensibly about ISRO's launching of two satellites for Devas, but the fine print guarantees the private firm unbridled usage of 70 MHz of the scarce S-band spectrum for a period of 20 years.

The space agency's largesse to Devas may have cost the ex-chequer over Rs 2 lakh crore, the report notes, citing preliminary estimates of the auditing authority.

The CAG has asked for an explanation from the Department of Space on the preferential allotment of the S-band spectrum by Antrix, forgoing a competitive bidding process, on redirecting public funds out of ISRO's budget towards the Devas satellites and minsinforming regulator's about the comprehensive financial details of the project.

The deal would have earned Antrix a mere $11 million a year per satellite for twelve years (totalling a little under Rs 1,200 crore considering current exchange rates).

Devas gets access to 70 MHz of broadband spectrum in the 2,500 Mhz band - once used by Doordarshan for satellite delivery of programmes. The band, however, is considered to be of enormous commercial value for high-speed, terrestrial mobile comumunications.

In 2010, an auction of just 15 Mhz of similar airwaves for 3G mobile services got the governmentnearly Rs 67,719 crore.

The report also adds that despite strong objections from the Space Commission in July 2010, the contract has not been scrapped and that Devas has been given some spectrum to conduct trials.

Related report:

BSNL joins the wide spectrum of scams with free franchising

State-run telco might have appointed franchises without charging upfront payment

State-run telecom firm Bharat Sanchar Nigam Limited (BSNL) has come under government scanner for having allegedly handed out wireless broadband acess to franchisees for free, according to a Hindustan Times report citing telecom minister Kapil Sibal's note to the secretary, department of telecommunications (DoT).

BSNL reportedly agreed to a revenue-share moel for franchising its broadband spectrum even after it has paid 80 billion rupees ($1.77 billion).

The report carried an excerpt of Sibal's letter: "It has been pointed out that 'cheap access' has been provided to these franchisees by BSNL, including costly broadband services in metropolitan cities wireless access spectrum for which BSNL has already made massive upfront payment."

BSNL chairman Gopal Das declined to comment on the issue when approached by Reuters, saying that he had not read the HT report.