We paid 10 times the normal price: Devas

After remaining silent for three days, Devas Multimedia, the firm at the centre of the so-called ‘second spectrum scam’ finally opened up to the media. In an exclusive interview to DNA, Ramachandran Viswanathan, one of the founders and the current CEO and president of the firm rebutted all the allegations against his firm.

Can you explain the background of people behind Devas? There are allegations that this is a side-business started by a former ISRO director?
We are a set of highly seasoned international satellite executives who have had a long track-record in building new systems the world over. No one in the group of people who founded this company has had any affiliation with the ISRO. The current chairman of the company, MG Chandrasekhar was not with the company in 2003-2005, when we negotiated and inked the agreement with ISRO. Chandrasekhar joined in 2006, a year and a half after the agreement was signed with ISRO.

The first allegation — there was no bidding before it was allotted to you?
Satellite transponders in the country are allotted according to the SatCom policy. It is an open window process [where interested parties submit applications and wait their turn for capacity allocation.] That is how the DTH capacity leases [to Sun, Tata Sky etc.] and VSAT capacity leases have all been allotted — through the same process. In fact, while ours is 70 MHz of spectrum, other allotments by Antrix run into hundreds of MHz to a single firm.

How many of these deals were auctioned? How many were taken to the cabinet or the prime minister by Antrix or DoS?
None.

Second allegation — your contract was at a throwaway price?
Of all the deals that Antrix has today, ours is the one that has fetched the highest price on a per-MHz [spectrum] basis. We paid a premium because ours was a hi-power satellite suitable for a radio service.

How much are you paying ISRO, according to the contract?
I know that the current market price for satellite spectrum is around $1.3 million per year for 36 MHz [one transponder]. There is an upfront payment of $40 million plus $18-22 million per year. On top of that, we also have to pay a percentage of the total revenues of [our] company. In all, we will be paying more than $300 million over the 12 years for 70 MHz — the expected life of the satellites. On a per year basis, we will be paying $25 million per year or $12.5 million per year for a single transponder of 35 MHz. This is ten times the rate at which satellite spectrum is sold by Antrix to other players.

Who or what do you think is behind the controversy?
Clearly political and business vested interests have been at play on the heels of all the turmoil in the mobile field. This would not have occurred unless somebody is clearly trying to push an agenda, I don’t know who it is.

Government is now saying that the S Band frequencies allotted to you has not been set apart for ISRO satellites at all, as of now. It is also saying that it is thinking of cancelling your contract. What do you have to say to that?
Spectrum in India is allocated according to what is called the National Frequency Allocation Plan which states what frequency will be used by which service. According to that, 150 MHz of the 2.5 GHz S Band, which we have been allocated in, is to be used for Satellite communication, broadcasting etc.. It is very clearly provided for Satellite use.

Point number two: We have a letter from Antrix in 2006 which clearly states that it has got all the requisite approvals to bring the contract into force. The approvals were given by the government in February 2006. Without this, we would not have invested the money or raised funds from companies like Deutsche Telekom etc. You cannot now say that you did not give authorization.

How much have you invested?
We have invested nearly $170 million including $150 million in making equipment and we have no option now except to get the spectrum.