· AT&T overtakes Verizon to become the world’s most valuable telecoms brand
· Huawei the most valuable infrastructure brand, valued at US$25 billion
· Qualcomm’s brand value surging thanks to huge royalty fees
· Nokia’s brand revival continues with brand value up 62% following 3310 launch
Every year, leading valuation and strategy consultancy Brand Finance values the brands of thousands of the world’s biggest companies. Brands are first evaluated to determine their power / strength (based on factors such as marketing investment, familiarity, loyalty, staff satisfaction and corporate reputation) and given a corresponding letter grade up to AAA+. Brand strength is used to determine what proportion of a business’s revenue is contributed by the brand, which is projected into perpetuity to determine the brand’s value. The world’s 500 most valuable telecoms brands are then ranked and included in the Brand Finance Telecom 500 and the top ten infrastructure providers in the Telecoms Infrastructure 10.
AT&T saw its brand value grow 45% this year to US$87 billion, overtaking Verizon as the most valuable telecoms brand. Its acquisitive growth in South America and Mexico follows its 2015 takeover of DirecTV, resulting in continued growth in brand value and an increase in market share.
Verizon, though it has lost its position at the top of the table, remains strong, registering a 2 point BSI score improvement and 4% brand value growth. A spate of rumours has surrounded Verizon’s potential takeover of Charter Communications. Such a deal would create the US’ biggest internet provider and is yet another example of the consolidation affecting the industry. Verizon’s share price jumped as the speculation continued though has since cooled after the deal failed to materialise and concerns were raised at the levels of debt the new entity would be exposed to. A new Charter/Verizon combined entity would reportedly be the world’s largest debtor, with borrowings of over US$200 billion.
T (Deutsche Telekom) is Europe’s most valuable telecoms brand, though its growth is largely being driven by its performance outside the continent. The 10% increase in brand value came largely as a result of higher revenues and increased market share in the U.S. market. In the third quarter of 2016 T-Mobile (US) added around 969,000 subscribers, dwarfing both Verizon and A&T which added only 200,000 and 450,000 respectively.
Huawei retains the top spot in the infrastructure table with a brand value of US$25 billion after growing 28%. The Chinese giant persevered with its efforts to raise its brand profile worldwide. After successfully implementing global marketing campaigns, which include celebrity endorsements, its brand recognition subsequently increased to 81% in 2016, up from 76% in 2015.
Qualcomm is the fastest growing telecoms infrastructure brand, rising 65% in value to US$6.8 billion. However, legal disputes with Apple regarding allegations that Qualcomm is exploiting its dominant position by charging excessive royalties raise questions about whether this growth can be sustained.
Nokia is one of the more remarkable success stories of 2017. Its brand value peaked at US$33.1 billion in 2008, making it the world’s 9th most valuable brand across all sectors. Its slow response to the emergence of smart phone technology led to a well-documented decline at the hands of Apple and Samsung. Brand Value sunk to a low of just of US$2 billion in 2014.
However, after a period of consolidation, Nokia is firmly on the road to recovery. After the mobile device division was sold off, the brand survived as Nokia Networks (rebranded from NSN). Nokia Networks acquired a controlling stake in Alcatel-Lucent in 2016 to create one of the largest players in the sector. Alcatel-Lucent has since been rebranded as Nokia, further reinforcing the position of the Finnish brand.
2017 marks another turning point in the Scandinavian giant’s saga, as the Nokia brand is once again be visible on mobile devices. HMD (founded by Nokia veterans in 2016) is launching a number of handsets at Mobile World Congress. Perhaps the greatest level of excitement is focussed on the revival of the iconic 3310. This newfound momentum sees Nokia’s brand value climb 62% to US$4.9 billion while the fundamental brand equity measures are improving too, which sees Nokia’s brand strength rating upgraded from AA to AA+.
Note to Editors
Brand values are reported in USD. For precise conversions into local currency values, please confirm rates with the Brand Finance team. More information about the methodology, as well as definitions of key terms are available in the Brand Finance Telecoms 500 report document.
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.