Devas Multimedia, the company at the center of a controversy over satellite spectrum allocation, said on Thursday that it has a legally binding agreement with Antrix, the commercial arm of the Indian Space Research Organization (ISRO), raising the possibility that the company may sue if the government goes ahead and terminates the agreement.
Devas, a startup in Bangalore, aims to set up a satellite network for delivering applications like e-governance and remote connectivity using S-Band spectrum from Indian satellites. Its investors include Deutsche Telekom.
After criticism in the local media and from opposition political parties this week over the 2005 agreement, officials from the Department of Space told reporters on Tuesday that it had in fact considered terminating the agreement last July, but had not done so because of the complexities involved.
The officials of the Department of Space said that it was decided not to lease spectrum to Devas as new strategic and social requirements had emerged for the spectrum.
The government on Wednesday constituted a committee to review the technical, commercial, procedural and financial aspects of the agreement between Devas and Antrix, and to also look into the adequacy of the approval processes for the agreement. The committee is to submit its report to Prime Minister, Manmohan Singh, who holds the space portfolio, within one month.
S. Satish, a spokesman for ISRO said on Thursday that if a decision is finally taken to cancel the agreement, Devas will be compensated.
Devas said in its statement, that it had proceeded with the project after the required consents and approvals were obtained from government agencies including the Space Commission and the Union Cabinet, and the same was confirmed to it by Antrix in February, 2006. Devas also received approvals for foreign direct investment from India's Foreign Investment Promotion Board and is in full compliance with government regulations, the company said.
Having fulfilled all its obligations with regard to the 2005 agreement, Devas said it now awaits the delivery of the contracted space segment capacity, which has been delayed by more than two years.
The 2005 agreement was criticized because the Indian government had not gone in for a competitive bidding while allotting scarce satellite spectrum.
The government is already facing criticism for having allotted 2G spectrum to mobile operators in 2008 at basement prices, rather than through an auction.
The Central Bureau of Investigation has so far arrested a former telecommunications minister, two civil servants, and the vice-chairman of Etisalat's Indian joint venture in its investigations into the alleged 2G scam. The U.A.E. operator said it bought a stake in the Indian company after the licenses were acquired by local promoters.