· Brand value slips across the sector as US telecoms brands fend off internet giants
· AT&T ranked #1 in Brand Finance Telecoms 300 despite 5% brand value drop to US$82.4 billion
· Chinese telecoms brands pull ahead with China Mobile named world’s strongest telecoms brand
· UAE’s Etisalat, Germany’s Deutsche Telekom, Mexico’s Claro are most valuable brands in their regions
· Nokia is fastest-growing telecoms infrastructure brand, up 71% to US$8.4 billion brand value
American telecoms players continue to dominate the Brand Finance Telecoms 300 league table, with AT&T retaining the title of the sector’s most valuable brand, but most US brands experience a loss in value as they fend off competition from internet giants. Challenges presented by technology brands, such as Facebook-owned WhatsApp and Microsoft-owned Skype, have meant American telecoms must update their voice and video calling service offerings to stay relevant.
Telecoms revenue growth has been in decline since 2013 as more customers opt for Over-The-Top (OTT) messaging services to remain in touch. With Microsoft (Skype), Facebook (Messenger, WhatsApp), Amazon (Alexa), Tencent (WeChat), Google (Hangouts) and many other firms expanding their services in this space, demand for OTT services is causing telecoms brands to adapt fast. However, 79% of mobile customers worldwide think that demand for OTT is outpacing the ability of telecoms brands to adjust, according to a 2017 Mobile Economy report by the GSMA.
David Haigh, CEO of Brand Finance, commented:
“Whilst American telecoms brands are at the top of the table, they are grappling with falling brand values as they find themselves navigating a complex regulatory environment and competitive offerings from the internet challengers, all whilst battling sinking revenues. In order to survive in the digital era, telcos must put up a strong fight by adopting innovative strategies.”
Nevertheless, when taking a snapshot of brand representation by country, the US still dominates as American brands hold the largest share or 28% of the total brand value in the Brand Finance Telecoms 300 league table. By comparison, China and Japan each account for 11% of the brand value in the telecoms sector and British telecoms brands occupy 8% of the league table.
AT&T Calling out Competitors
AT&T maintained its position as the leading telecoms brand in the world, despite its brand value falling 5% from US$87.0 billion to US$82.4 billion over the past 12 months. AT&T struggled with the loss of postpaid mobile phone subscribers as lower pricing for its unlimited plans failed to attract customers in a saturated US market. Looking to the future, the brand is now involved in new 5G network investments and participating in intensive testing for vehicle-to-everything (V2X) networks.
America’s largest wireless network, Verizon, came in second place with a brand value of US$62.8 billion, down from US$65.9 billion last year, dropping 5% in brand value. Also placed within the top 10 in 6th spot is American brand Xfinity, the wireless and TV service owned by the wider Comcast network and valued at US$26.1 billion. Another American brand which has seen its brand value drop is independent business connectivity provider, Spectrum, which came in 12th place whilst contending with a 15% fall in brand value.
China Makes its Presence Felt
The biggest success story from China in the Brand Finance Telecoms 300 league table is China Telecom which saw a 36% growth to its brand value, rising through the ranks to 7th place this year, from 10th last year. The brand is valued at almost US$24.0 billion. China Telecom is stepping up efforts towards 5G deployment, with plans to run a phased testing period for capacity and performance of 5G networks across six cities from 2017 to 2019 before launching commercially in 2020. China Telecom is also the country’s biggest fixed-line network services provider.
China Mobile is ranked in 3rd place, with a brand value of US$53.2 billion, up 14% from last year, taking the title of most valuable telecoms brand in Asia. China Mobile boasts the world’s most extensive mobile network and the world’s largest mobile phone customer base. Its success can also be credited to the advanced moves it is making in the testing of single-carrier 400G Optical Transport Networking (OTN) - the first of its kind for domestic providers. China Mobile is also the strongest brand in the Brand Finance Telecoms 300 league table with a Brand Strength Index (BSI) score of 89.3 and a corresponding AAA brand rating.
Etisalat are Middle East Winners
In the Middle East, Etisalat has been named the region’s most valuable telecoms brand for the first time. The Abu Dhabi-based operator has turned the dial up with a 40% increase to its brand value, cementing its place as a Strategic Enabler in the UAE’s digital transformation.
Etisalat boasts an impressive AAA- brand rating and is the only telecom provider from the region to break the US$7 billion brand value mark. The key growth drivers behind Etisalat’s US$7.7 billion brand value include the brand’s innovative customer service-driven strategy, its leadership position on the 5G revolution, and successful launches of global brand-building initiatives.
Deutsche Telekom Does it Again
Deutsche Telekom achieved a 10% increase in its brand value over the last year, taking it beyond the US$40 billion barrier to US$40.2 billion. Its reputation as a reliable telecommunications provider in Germany has led to success beyond German borders, as it extends the business across Europe and North America. In Europe, the 5G revolution will be the next territory in which Deutsche Telekom could further dominate. Deutsche Telekom is not only building a reputation as a leading technology company which continues to invest in cutting edge infrastructure, such as the new fibre-optic cabling throughout its fixed network. It is also broadening its brand appeal by using the memorable magenta colour for brand communications, creating products and services, such as Magenta ONE and its fashion and accessories range.
Claro Leads in Latin America
Claro is the most valuable telecoms brand in the Latin American region. Ranked 32nd and valued at US$6.1 billion, Claro has led its Mexican parent company América Móvil’s portfolio, which also includes Telcel (41) and Telmex (74), and has become the group’s first truly pan-regional brand. Claro operates in numerous countries throughout Central and South America as well as the Caribbean providing subscribers with a variety of telco services and high-speed mobile internet options.
Brand Finance Telecoms Infrastructure 10 2018
Alongside the 300 most valuable telecoms operator brands, Brand Finance has ranked the world‘s top 10 most valuable telecoms infrastructure brands in the Brand Finance Telecoms Infrastructure 10 2018 league table.
Huawei Way Ahead
Chinese brand Huawei comes out top in the Brand Finance Telecoms Infrastructure 10 league table, valued at US$38.0 billion, up 51% from last year’s US$25.2 billion. Huawei’s phenomenal global rise continues with its smartphone business now firmly in third place behind Apple and Samsung. The core networking business, which delivers the bulk of global revenue, is growing with the expectation of 5G services coming online soon. Since 2012, Huawei has grown nearly 700% from US$4.8 billion to US$38.0 billion, trailblazing Chinese efforts to build home-grown brands.
Nokia Makes a Comeback
Favoured Finnish brand Nokia is the third most valuable telecoms infrastructure brand worldwide, reaping the benefits of refreshing its well-loved mobile phones. Nokia’s brand story in the past few years can be likened to that of a phoenix rising from the ashes. Nokia has seen a 71% increase in brand value to US$8.4 billion in the past year, quadrupling since the low point of US$2.0 billion in 2014.
Note to Editors
Every year, leading valuation and strategy consultancy Brand Finance values the world’s biggest brands. The 300 most valuable telecoms operator brands in the world are included in the Brand Finance Telecoms 300 league table and the 10 most valuable telecoms infrastructure brands are listed in the Brand Finance Telecoms Infrastructure 10 ranking.
Brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand.
More information about the methodology as well as definitions of key terms are available in the Brand Finance Telecoms 300 report.
Data compiled for the Brand Finance Telecoms 300 league table and report is provided for the benefit of the media and is not to be used for any commercial or technical purpose without written permission from Brand Finance.
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About Brand Finance
Brand Finance is the world’s leading brand valuation and strategy consultancy, with offices in over 20 countries. Brand Finance bridges the gap between marketing and finance by quantifying the financial value of brands. Drawing on expertise in strategy, branding, market research, visual identity, finance, tax, and intellectual property, Brand Finance helps brand owners and investors make the right decisions to maximise brand and business value.
Definition of Brand
Brand Finance helped to craft the internationally recognised standard on Brand Valuation – ISO 10668. It defines brand as a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos, and designs, intended to identify goods, services or entities, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits.
Brand Strength is the efficacy of a brand’s performance on intangible measures, relative to its competitors. In order to determine the strength of a brand, we look at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance.
Each brand is assigned a Brand Strength Index (BSI) score out of 100, which feeds into the brand value calculation. Based on the score, each brand is assigned a corresponding rating up to AAA+ in a format similar to a credit rating.
Brand Valuation Approach
Brand Finance calculates the values of the brands in its league tables using the Royalty Relief approach – a brand valuation method compliant with the industry standards set in ISO 10668. It involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ understood as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.
The steps in this process are as follows:
1 Calculate brand strength using a balanced scorecard of metrics assessing Marketing Investment, Stakeholder Equity and Business Performance. Brand strength is expressed as a Brand Strength Index (BSI) score on a scale of 0 to 100.
2 Determine royalty range for each industry, reflecting the importance of brand to purchasing decisions. In luxury, the maximum percentage is high, in extractive industry, where goods are often commoditised, it is lower. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database.
3 Calculate royalty rate. The BSI score is applied to the royalty range to arrive at a royalty rate. For example, if the royalty range in a sector is 0-5% and a brand has a BSI score of 80 out of 100, then an appropriate royalty rate for the use of this brand in the given sector will be 4%.
4 Determine brand-specific revenues by estimating a proportion of parent company revenues attributable to a brand.
5 Determine forecast revenues using a function of historic revenues, equity analyst forecasts, and economic growth rates.
6 Apply the royalty rate to the forecast revenues to derive brand revenues.
7 Brand revenues are discounted post-tax to a net present value which equals the brand value.