Call for help may be in order for telecoms industry, as most brands see decline in value

01 April 2020
  • COVID-19 to dent telecoms industry with limited impact as work from home revolution ignites demand
  • Verizon clinches title to be named world’s most valuable telecom brand, valued at US$63.7 billion
  • Etisalat most valuable and strongest telecoms brand in Middle East and Africa, only brand to maintain AAA rating in region
  • Vietnam’s VNPT is fastest growing, up 42% to US$2.4 billion
  • Advanced Info Service (AIS) is world’s strongest telecom brand, scoring impressive 92 out of 100 Brand Strength Index (BSI)

View the full Brand Finance Telecoms report here

COVID-19 global telecoms impact

The brand value of the world’s biggest companies is set to lose an estimated US$1tn as a result of the Coronavirus outbreak, with the telecoms sector seeing less of an impact than the likes of the aviation sector, according to the latest analysis by Brand Finance, the world’s leading independent brand valuation consultancy.

Brand Finance has assessed the impact of the COVID-19 outbreak based on the effect of the outbreak on Business Value, as at 18 March 2020, compared to what it was on 1st January 2020. Based on this effect, Brand Finance estimated the likely impact on Brand Value for each sector. Each sector has been classified into 3 categories based on the severity of Business Value loss observed for the sector in the period between 1st January 2020 and 18th March 2020.

David Haigh, CEO of Brand Finance, commented:

"The COVID-19 pandemic is now a major global health threat and its impact on global markets is very real. Worldwide, brands across every sector need to brace themselves for the Coronavirus to massively affect their business activities, supply chain and revenues in a way that eclipses the 2003 SARS outbreak. The effects will be felt well into 2021.

The telecoms sector can be seen as much more resilient in the face of COVID-19, while it experiences a faster revolution in data handling as a result of the remote working revolution we are seeing all around the world. Telecoms brands are in essence already being pressure tested, having seen an immediate spike in demand and now is the time to engage with customers and promote their offerings during this crisis.”

Verizon overtakes AT&T

Verizon is now the world’s most valuable with a brand value of US$63.7 billion, over taking its US rival AT&T (US$59.1 billion), according to the latest report by Brand Finance, the world’s leading independent brand valuation consultancy. In the battle of the American telco titans, Verizon is commended for its overall performance, network reliability, network speed, data performance, call and text performance, while AT&T is the fastest falling and now the second most valuable telecoms brand in the world.

Down 32% to $59.1 billion. AT&T finds itself inching down to second rank for the first time in nearly a decade and loses its leadership on the telco top 150, overtaken by Verizon. The brand diversified its entertainment portfolio over the last few years, culminating with the acquisition of WarnerMedia, as part of a plan to move away from relying on the traditional telco business and paid TV, as both revenue streams have been drying up over the last years.

The upcoming launch of HBO Max with WarnerMedia, which will compete with streaming brands like Netflix, should help propel the company forward. AT&T recently announced a plan to drive significant growth through 2022, including limiting acquisitions, paying off debt to improve its balance sheet, and investing in strategic areas, such as 5G infrastructure to enable innovative services far above and beyond data.

David Haigh, CEO of Brand Finance, commented:

“A call to the help desk may be in order for the telecoms industry, as most telcos saw their brand value decline this year, Over the past year, we’ve seen the combined value of the world’s top telecoms brands decline by 11% to a combined value of $692 billion, compared to $777 billion in 2019 – while all other major sectors recorded significant increases."

Deutsche Telekom most valuable in Europe

Despite its 14% drop in brand value, Deutsche Telekom retains its place as the most valuable European telecoms brand in this year’s Brand Finance Telecoms 150 report with a brand value of US$40.0 billion. As Deutsche Telekom is one of the biggest investors by capex across telecom infrastructure, it would be worth monitoring precisely how the brand will leverage its leadership position to gain advantage in the 5G deployment and future applications, which may create additional value over time in terms of both brand and business. For now, the brand remains true to its aspiration to be seen as Europe’s leading telecoms brand.

David Haigh, CEO of Brand Finance commented:

“With major telecoms brands being squeezed from all sides as messaging apps like WhatsApp impact voice and SMS revenue, challenger brands offering comparable data services at below market rates are leading to fierce price competition and decreasing margins.”

Etisalat is Middle East and Africa leader

Emirati telecoms giant Etisalat has retained its title of the most valuable telecoms brand in the Middle East. Up 3 places to be ranked the world’s 16th most valuable telecoms brand, with a brand value of US$8.5 billion, Etisalat has demonstrated a consistent performance over the years. The brand is also the strongest telecoms brand in the Middle East and Africa – making it the sole brand in the region to maintain the prestigious AAA Brand Rating.

Etisalat’s footprint in 16 countries across Asia, Middle East, and Africa makes it home to an impressive portfolio of brands including Mobily, Ufone, Maroc Telecom, PTCL, and Etisalat Misr with a combined portfolio brand value of US$11.0 billion.

As the premier digital and telecommunications partner of the upcoming Expo2020 in Dubai, all eyes will be on Etisalat as it prepares to excite the Expo’s expected 25 million visitors with a seamless 5G connectivity that brings the event’s themes to life.

David Haigh, CEO of Brand Finance, commented:

“Etisalat is to be commended for the fastest network in the region and its robust 5G rollout. It is the brand’s growing role in fulfilling the UAE’s National Innovation Strategy and its dominant influence in shaping the region’s digital future which are behind its continued success.”

Vietnam’s VNPT is fastest growing

The fastest growing brand is Vietnam Posts and Telecommunications Group (VNPT), recording an impressive 42% growth to $2.4 billion. VNPT has invested in 4G networks in order to meet customer demand and has ramped up efforts to increase its fibre optic cable speed, while still maintaining tariffs. The Vietnamese government’s plans for the Fourth Industrial Revolution, smart cities, start-ups, and the National Innovation Network Program, 4G and 5G, IoT, and mobile telecommunication networks, are supporting the telecoms sector to grow from strength to strength.

AIS is sector’s strongest

In addition to measuring overall brand value, Brand Finance also evaluates the relative strength of brands, based on factors such as marketing investment, familiarity, loyalty, staff satisfaction, and corporate reputation. Alongside revenue forecasts, brand strength is a crucial driver of brand value.

According to these criteria, Thailand’s AIS is the world’s strongest telecoms brand with a Brand Strength Index (BSI) score of 92 out of 100. The brand was crowned strongest telecoms last year and have seen a growth in BSI score while also managing to retain the elite AAA+ brand strength rating.

As the nation’s largest mobile operator, AIS has capitalised on Thailand’s booming mobile gaming industry through its sponsorship of the Thailand Game Expo. AIS also confirmed a sub-license deal to live broadcast the now postponed 2020 Tokyo Olympic Games, the 2020 Youth Olympics, the 2022 Winter Olympics In Beijing and the Dakar Youth Olympics in 2022.

China Mobile holds firm

Despite a drop by 12% in its brand value since last year, China Mobile (US$49.0 billion) has seen success through powering ahead with its 5G+ Plan, which focuses on its four main growth engines: customer, home, business and new markets. Having been granted its 5G license in June 2019, the brand has accelerated the process through its launch across 50 cities, assimilating emerging technologies such as AI, IoT and cloud computing and developed ever-more critical capabilities. Against the backdrop of the Coronavirus outbreak, China Mobile must now seize upon the opportunities from businesses and customers working from home and requiring more digital and cloud-based services.

MTN is Africa’s top telecom

Rising up through the ranks of this year’s Telecoms 150 report is South Africa’s MTN (US$3.3 billion). MTN’s brand value was boosted by a solid overall performance for the year, despite challenging economic conditions and regulatory challenges in some markets. Africa’s biggest telcos brand, MTN has grown its subscriber level steadily over the past year and boosted its revenues. Customers spending more on data services and MTN’s 5G rollouts have meant the brand is well placed to cater to this growing demand.

In recognition of MTN’s increasingly strong leadership position in telecommunication services throughout Africa and the other countries within which it operates, and because of their increasingly resilient network investments, MTN’s brand strength rating has been upgraded from AAA- to AAA. While their existing network infrastructure will be challenged by the upcoming transition from 4G to 5G mobile phone services, this solid brand strength will put them in a strong position to compete in the future.

David Haigh, CEO of Brand Finance, commented:

“MTN is to be commended for its performance in its home market as well as further afield. They are increasingly recognised throughout Africa by their customers as providing a high-quality service, because their brand image is deeply rooted on more than just marketing campaigns.”

Telecoms Infrastructure 10 2020

Alongside the 150 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 2020 league table.

Clearly the next big opportunity for the telecoms infrastructure industry, the 5G space is inviting fierce competition, with Huawei expanding into markets traditionally covered by Western providers. Despite sparking controversy, the Chinese giant is making clear headway, and with a brand value of US$65.1 billion, now counts among the world’s top 10 most valuable brands for the first time.

Finland’s Nokia, up 1% to US$9.9 billion has enjoyed a boost in brand value serving the world’s top communications service providers, enterprises, and consumers – as well as deploying cutting-edge 5G technology.

David Haigh, CEO of Brand Finance commented:

“Investments are expected to pay off in the coming years, setting Nokia in a prime position to continue competing with peers, in particular in rolling out 5G networks around the world.”

View the full Brand Finance Telecoms report here

ENDS

Note to Editors

Every year, Brand Finance values 5,000 of the world’s biggest brands. The 150 most valuable Telecoms brands are included in the Brand Finance Telecoms 150 report.

Brand value is understood as the net economic benefit that a brand owner would achieve by licensing the brand in the open market. Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors.

Additional insights, charts, and more information about the methodology, as well as definitions of key terms are available in the Brand Finance Telecoms 150 report.

Data compiled for the Brand Finance rankings and reports are provided for the benefit of the media and are not to be used for any commercial or technical purpose without written permission from Brand Finance.

Media Contacts

Florina Cormack-Loyd
Florina Cormack-Loyd
Senior Communications Manager
Brand Finance

About Brand Finance

Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance, Brand Finance evaluates the strength of brands and quantifies their financial value to help organisations of all kinds make strategic decisions.

Headquartered in London, Brand Finance has offices in over 20 countries, offering services on all continents. Every year, Brand Finance conducts more than 5,000 brand valuations, supported by original market research, and publishes nearly 100 reports which rank brands across all sectors and countries.

Brand Finance is a regulated accountancy firm, leading the standardisation of the brand valuation industry. Brand Finance was the first to be certified by independent auditors as compliant with both ISO 10668 and ISO 20671, and has received the official endorsement of the Marketing Accountability Standards Board (MASB) in the United States.

Methodology

Definition of Brand

Brand is defined 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

Brand strength is the efficacy of a brand’s performance on intangible measures relative to its competitors. Brand Finance evaluates brand strength in a process compliant with ISO 20671, looking at Marketing Investment, Stakeholder Equity, and the impact of those on Business Performance. The data used is derived from Brand Finance’s proprietary market research programme and from publicly available sources.

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 Brand Rating up to AAA+ in a format similar to a credit rating.

Brand Valuation Approach

Brand Finance calculates the values of brands in its rankings 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, while 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 Discount post-tax brand revenues to a net present value which equals the brand value.

Disclaimer

Brand Finance has produced this study with an independent and unbiased analysis. The values derived and opinions presented in this study are based on publicly available information and certain assumptions that Brand Finance used where such data was deficient or unclear. Brand Finance accepts no responsibility and will not be liable in the event that the publicly available information relied upon is subsequently found to be inaccurate. The opinions and financial analysis expressed in the study are not to be construed as providing investment or business advice. Brand Finance does not intend the study to be relied upon for any reason and excludes all liability to any body, government, or organisation.

The data presented in this study form part of Brand Finance's proprietary database, are provided for the benefit of the media, and are not to be used in part or in full for any commercial or technical purpose without written permission from Brand Finance.

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