SAT heads east
Up until 1900, Stockholms Allmänna Telefonaktiebolag (SAT) was active only in the Stockholm area. When SAT through its subsidiaries acquired concession rights in Moscow and Warsaw in 1901, a new, foreign-oriented phase in the company's history began which supplemented domestic operations.
At the same time as SAT applied for telephone concessions in Moscow and Warsaw - Poland belonged to Russia at that time - the company also sought a concession for St. Petersburg. The American Bell Company had had telephone concessions in these and other cities since the 1880s. Due to high tariffs, however, the telephone networks were not developing in the manner that the Russian Post and Telegraph Administration wished. The Russian authorities therefore did not want to renew these concessions, but instead opened the them to new competition in 1900. SAT did not succeed in winning the concession in St. Petersburg, however, which was awarded to the municipal authorities.
For telephone operations in Moscow and Poland, SAT joined with leading Swedish and Danish bankers to form the company Svensk-Dansk-Ryska Telefon AB. The Russian telephone concessions meant that SAT received a contract for extensive construction work in Moscow and Warsaw. This also had consequences for Ericsson, since SAT, after selling its telephone production plant to Ericsson, purchased most of its telephone equipment from Ericsson.
When Svensk-Dansk-Ryska Telefon took over the Bell Company's network in Moscow in 1901, there were only 3,000 subscribers after 20 years of operation. The network in Warsaw had 2,300 subscribers. In 1904, SAT decided to rebuild and expand the networks in Moscow and Warsaw so that they would have a technically advanced design and efficient switching functions, given what was possible with the manual telephone systems of that time. Because SAT's Russian subsidiary charged lower tariffs than the Bell company, this led to tremendous growth in the number of subscribers. By 1914, the Warsaw network had just over 32,500 subscribers, while the Moscow network had grown to nearly 62,000 subscribers by 1916.
The Svensk-Dansk-Ryska telephone station in Moscow was at the time of the outbreak of World War I the world's largest telephone station. Calls from some 60,000 subscribers were manually connected by 400 switchboard operators. Subscriber growth continued until the revolution of 1917.
Within the framework of the concession agreement, the Svensk-Dansk-Ryska company's telephone network was turned over to the Russian Post and Telegraph Administration under the Czar government on January 1, 1917. The amount of compensation to be provided was never established, and this became a long-standing issue of dispute. In the company's own books, the installations in Moscow were valued at more than SEK 50 million in 1918. Unlike Ericsson's Russian company, Svensk-Dansk-Ryska Telefon was never nationalized. Instead, the company thus had a non-determined but contracted amount of money to be claimed. The basis for calculating this compensation was the subject of lengthy discussions, but the issue was of only theoretical interest, since no payment was forthcoming.
During the First World War, Russian troops seized the telephone network in Warsaw in the autumn of 1915. Here the company received no income for the network, although costs were incurred. In Moscow, the company had no income after 1917, but still had interest expenses.
The previously so profitable operations in Moscow and Warsaw under SAT's management were thus transformed during 1916 and 1917 to loss-making inactivity with large debts and frozen compensation, which following their merger in 1918, would cause considerable problems for SAT and Ericsson. Although a significant loss had been sustained in Poland, the company in Poland, which became independent after the war, was able to continue telephone operations in cooperation with local authorities and provided substantial income over the coming years.
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