Telecoms Brand Value Study Highlights Tussle with Tech Firms
The Brand Finance Telecoms Report is an annual study conducted by leading brand valuation and strategy consultancy Brand Finance. The world’s biggest telecoms companies are put to the test to determine which command the most powerful and most valuable brands. Operators and infrastructure providers have been split into separate tables for the first time. With 500 operators and 100 infrastructure providers, more brands than ever have been evaluated.
The Top 5
Verizon is the world’s most valuable telecoms brand. 74% brand value growth brings the operator’s total brand value to US$53.5 bn. Rapidly rising revenues and an upgraded brand rating (now AAA-) are primarily responsible for the rapid increase in value. The brand rating is determined by a wide range of factors on Brand Finance’s Brand Strength Index including trust, loyalty, corporate responsibility and governance. Verizon has finally come of age, acquiring Vodafone’s 45% stake in Verizon Wireless to take full charge of its own affairs.
The deal has been a successful move for both parties; Vodafone’s $130bn windfall from the sale of its stake has boosted its financial performance and helped increase its brand value by 10% to US$29.6bn. In fact it has been very lucrative for the British economy as a whole; Vodafone’s recently announced huge dividend payments are likely to provide a significant stimulus to the UK economy.
Though Vodafone has performed well, its rank has slipped due to the rapid rise of T and China Mobile. The ongoing consolidation of services under the ‘T’ master-brand and a presence in the fast-growing US market has contributed to the 42% brand value increase for T. Meanwhile Chinese brands continue to build brand value rapidly as the country’s huge population becomes more urbanized, networked and interconnected. Both China Unicom and China Mobile are now in the top ten, with newly upgraded AA+ brand ratings and brand values of US$15.8bn and US$31.8bn respectively.
The World’s Most Valuable Telecoms Brands (Top 5 Operators)
|
Rank 2014 |
Rank 2013 |
Brand |
Country |
Brand Value 2014 (USDm) |
Brand Rating 2014 |
Brand Value change (USDm) |
BV change % |
Brand Value 2013 (USDm) |
Brand Rating 2013 |
|
1 |
1 |
Verizon |
US |
53,466 |
AAA- |
22,737 |
74% |
30,729 |
AA+ |
|
2 |
2 |
AT&T |
US |
45,410 |
AA |
15,004 |
49% |
30,406 |
AA+ |
|
3 |
4 |
China Mobile |
China |
31,845 |
AA+ |
8,549 |
37% |
23,296 |
AA |
|
4 |
5 |
T |
Germany |
30,607 |
AA |
9,064 |
42% |
21,543 |
AA+ |
|
5 |
3 |
Vodafone |
UK |
29,612 |
AAA- |
2,603 |
10% |
27,009 |
AAA |
For the full 500 click here. You can select by country from the dropdown menu at the top.
Operators Harnessing Brand Power to Recover Margins
Operator brands have been overshadowed for the past few years by brands in adjacent sectors, from handset manufacturers like Apple (brand value US$105bn) and Samsung (US$79bn) to internet services such as Google (US$69bn) and Facebook (US$9.8bn). Many have felt exploited by the tech giants who have profited from their infrastructure without any financial contribution. With the acquisition of WhatsApp and the announcement of internet voice calls, Facebook will now not just be piggybacking on the operators’ networks, but actively eroding revenues. The fact that Facebook represents up to a quarter of web traffic for firms such as Vodafone will only harden their resolve.
As a result of all this, the shrewdest telecom brands are becoming more assertive. Some are taking on the web firms directly; Netflix (brand value US$3.2bn), the largest single source of US web traffic, has had to strike a deal with Comcast (US$15.3bn) to ensure adequate bandwidth. Others are remoulding themselves, harnessing the power of their brands and extending their range of activities to become more than just the ‘dumb pipes’ of our interconnected world. A case in point is BT. Having invested significantly in sports TV rights, the UK’s second most valuable telecoms brand is now pursuing a ‘triple-play’ strategy. BT’s brand value is up 70% to a total of US$15.3bn as is its brand strength rating, which has been upgraded two notches, from AA to AAA-. Its content focused strategy, investing huge sums in Rugby and in particular Premier League football to challenge Sky, appears to be paying off.
Brand Finance Chief Executive David Haigh stated, “Telecoms brands have shown impressive growth this year, making telecoms the second fastest growing sector by brand value. However the fastest growing sector of all is tech. It will be interesting to see how the ongoing power struggle between brands from the two sectors plays out. To stay on top telcos must exploit new business opportunities such as mobile payment and mobile banking, harnessing and extending their brands to create further value.”
Cisco Unchallenged at the Top of Infrastructure Table
The positions of the top 5 infrastructure providers are unchanged. Cisco holds onto the top spot, followed by Ericsson, Qualcomm, Alcatel-Lucent and Motorola. 34% growth brings Cisco’s brand value total to $20.8 bn, more than the rest of the top 5 combined. Alcatel-Lucent is the fastest riser of the five however. A huge, €1 billion cost cutting exercise involving management changes, asset sales and a 14% reduction in the size of its workforce has restored investor confidence. Earnings are up on last year and the share price has risen more than 200% since January 2013 amid rumours that Nokia may make a bid.
The World’s Most Valuable Telecoms Brands (Top 5 Infrastructure Providers)
|
Rank 2014 |
Rank 2013 |
Brand |
Country |
Brand Value 2014 (USDm) |
Brand Rating 2014 |
Brand Value change (USDm) |
BV change % |
Brand Value 2013 (USDm) |
Brand Rating 2013 |
|
1 |
1 |
Cisco |
US |
20,784 |
AAA |
5,315 |
34% |
15,468 |
AAA- |
|
2 |
2 |
Ericsson |
Sweden |
7,406 |
AA+ |
273 |
4% |
7,133 |
AA |
|
3 |
3 |
Qualcomm |
US |
4,337 |
AAA- |
1,371 |
46% |
2,967 |
AA |
|
4 |
4 |
Alcatel-Lucent |
France |
4,331 |
AA- |
1,963 |
83% |
2,368 |
A+ |
|
5 |
5 |
Motorola Solutions |
US |
2,541 |
AA |
416 |
20% |
2,124 |
AA- |
For the full 100 click here. You can select by country from the dropdown menu at the top.
Brand Finance is the world’s leading brand valuation consultancy. Bridging the gap between marketing and finance for more than 25 years, Brand Finance evaluates the strength of brands and quantifies their financial value to help organizations 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 over 100 reports which rank brands across all sectors and countries.
Brand Finance also operates the Global Brand Equity Monitor, conducting original market research annually on over 5,000 brands, surveying more than 150,000 respondents across 38 countries and 31 industry sectors. Combining perceptual data from the Global Brand Equity Monitor with data from its valuation database enables Brand Finance to arm brand leaders with the data and analytics they need to enhance brand and business value.
Brand Finance is a regulated accountancy firm, leading the standardization 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.
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 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 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.
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.
