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comparative financial analysis of telecom companies in india

comparative financial analysis of telecom companies in india

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Published by: pratikjoshi86 on Mar 18, 2010
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07/15/2013

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CHAPTER 1INTRODUCTION TO THEINDIANTELECOM INDUSTRY 
Page 1 of 42
 
HISTORY
The history of telecommunication industry started with the first public demonstration of Morse’s electric telegraph, Baltimore to Washington in 1844. In 1876 Alexander GrahamBell filed his patent application and the first telephone patent was issued to him on 7th of March. In 1913, telegraph was popular way of communication. AT&T commits to dispose itstelegraph stocks and agreed to provide long distance connection to independence telephonesystem. In 1956, the final judgment limited the Bell System to Common CarrieCommunications and Government projects but preserving the long-standing relationships between the manufacturing, researches and operating arms of the Bell System. In this judgment AT&T retained bell laboratories and Western Electric Company. This final judgment brought to a close the justice departments seven –year-old antitrust suit againstAT&T and Western Electric which sought separation of the Bell Systems Manufacturingfrom its operating and research functions. AT&T was still controlling the telecommunicationindustry.In 1982 , AT&T was requested to divestiture its stock ownership in Western Electric;termination of exclusive relationship between AT&T and Western Electric; divestiture byWestern Electric of its fifty percent interest in Bell Telephone Laboratories, AT&T ‘stelecommunication research and development facility, is a jointly owned subsidiary in whichAT&T and Western Electric each own 50% of the stock; separation of telephonemanufacturing from provision of telephone service and the compulsory licensing of patentsowned by AT&T on a non-discriminatory basis. It was telecommunication act of 1996 thattrue competition was allowed. The act of 1996 opened the market to all competitors. AT&T being the first telecommunication company paved the road for the telecommunicationindustry as well as set the policy and standards for others to follow.
1.1Beginning of telecommunication in India
The era of telecommunication in India started from the year of 1851 with the initiative fromgovt. of India near the city of Calcutta now known as Kolkatta. However the rapid growth intelecom industry came into picture after the year of 2002-03 onwards as the more number of service providers came into existence. Since 2002-03 there is rapid change in the technologyand increase in numbers of subscribers in the Indian telecom industry till now. The followingare the milestones in the Indian telecom industry.
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1851 First operational land lines were laid by the government near Calcutta.
1881 Telephone services introduced in India.
1883 Merger with postal system.
1923 Formation of Indian radio Telegraph Company.
1932 Merger of ETC and IRT into Indian Radio and Cable Communication Company.
1947 Nationalization of all foreign telecommunication companies to form the posts,telephone and telegraph, a monopoly run by the government’s ministry of communications.
1985 Department of telecommunication established , an exclusive provider of domestic and long-distance services that would be its own regulator.
1986 Conversion of dot into two wholly government – owned companies the VSNLfor international telecommunication and MTNL for services in metropolitan areas.
1997 Telecom regulatory authority created.Telecommunication is important not only because of its role in bringing the benefits of communication to every corner of India but also in serving the new policy objectives of improving the global competitiveness of the Indian economy and stimulating and attractingforeign direct investment. Indian Telecom industry is one of the fastest growing telecommarkets in the world. In telecom industry, service providers are the main drivers; whereasequipment manufacturers are witnessing growth and decline in successive quarters as sales isdependent on order undertaken by the companies.Today the Indian telecommunications network with over 375 Million subscribers is secondlargest network in the world after China. India is also the fastest growing telecom market inthe world with an addition of 9- 10 million monthly subscribers. The teledensity of theCountry has increased from 18% in 2006 to 33% in December 2008, showing a stupendousannual growth of about 50%, one of the highest in any sector of the Indian Economy. TheDepartment of Telecommunications has been able to provide state of the art world-classinfrastructure at globally competitive tariffs and reduce the digital divide by extendingconnectivity to the unconnected areas.India has emerged as a major base for the telecom industry worldwide. Thus Indian telecomsector has come a long way in achieving its dream of providing affordable and effectivecommunication facilities to Indian citizens. As a result common man today has access to this
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