Brand Finance has ranked the most valuable telecom brands globally, bridging the gap between the marketing and financial worlds for 2016.
Telecom Services – Top 10
AT&T saw its brand value grow 45 percent this year to USD 87 billion, overtaking Verizon as the most valuable telecom 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 percent brand value growth. A spate of rumors has surrounded Verizon’s potential takeover of Charter Communications. A new Charter/Verizon combined entity would reportedly be the world’s largest debtor, with borrowings of over USD 200 billion.
T (Deutsche Telekom) is Europe’s most valuable telecom brand, though its growth is largely being driven by its performance outside the continent. The 10 percent increase in brand value came largely as a result of higher revenues and increased market share in the US market. What is quite surprising is the fact that T (Deutsche Telekom) achieved all that not only without sacrificing its bottom line margins but by actually improving them considerably over the last year.
One of the top European performers this year was SFR whose brand value increased to USD 5.8 billion, growing 44 percent year-on-year. The rebranding of Numericable to SFR as well as the introduction of some SFR channels have had a positive impact on brand values.
Holland’s Ziggo has grown in a similar way. Owners Liberty Global decided to drop the UPC brand in favor of Ziggo, boosting brand value.
Brexit has taken its toll on brands within the UK. The two main factors driving the drop in all UK brands this year were the depreciation of the pound against the dollar and the uncertainty around the whole event, which impacted the discount rate we use for the UK market. Leaving these external factors aside, Vodafone and BT did not experience any major changes over the last year, both brands keeping their brand ratings at AA+ and AAA- respectively.
STC, Saudi Arabia’s most valuable brand and the Middle-East’s most valuable telecom brand, grew 11 percent in value this year to USD 6.2 billion. A clear indication of its success is the 5-point increase in its brand strength index score, proving that putting some heart into it pays off.
Like STC, Ooredoo has generally tried to employ a mono-brand structure. Since rebranding in its home market of Qatar in 2014, Ooredoo has pursued a successful rebrand strategy across seven other markets, establishing a significant regional brand spanning Africa, the Middle- East and South-East Asia. This has provided a platform for launching a new network in Myanmar, as well as fully dual branding with large, well-established operator, Indosat in Indonesia. Ooredoo’s brand value has grown from below USD 1 billion to more than USD 3 billion in 3 years, propelling it into the top 50. On a portfolio basis, Etisalat comes out on top in the Middle-East, USD 1.5 billion ahead of second-placed STC. Its stable of brands includes not just its flagship, but also Mobily, Maroc Telecom, PTCL, Ufone, and Moov. The core brand is growing at a rapid pace (45 percent year-on-year) as a result of improving revenues due to focused brand activities, global sports sponsorships and employee satisfaction.
As well as developing its core brand, Etisalat has pursued a broader brand portfolio strategy as a way to build business value through leveraging branded assets. Brands such as Mobily in Saudi Arabia provide access to very significant GCC markets and in addition, the portfolio approach has provided a foothold in key regional territories adjacent to the Middle-East base, for example, through Maroc Telecom in North Africa and in Pakistan. The latter gives the opportunity for branded development of a broader converged proposition, involving mobile and fixed-line operators Ufone and PTCL. This brand portfolio strategy opens up a range of opportunities in the future to use brand as a means of growing further business value.
Telefonica notably features in the top ten portfolios. O2’s brand value has withstood the impact of Brexit and Movistar is growing very strongly. It is up 26 percent to reach a value of over USD 10 billion for the first time. After a year of improving brand equity scores across all key metrics (consideration, familiarity, preference, recommendation, and satisfaction), it is one of Europe and the world’s most powerful brands with an AAA brand rating.
Telecom Infrastructure – Top 10
Huawei retains the top spot in the table with a brand value of USD 25 billion after growing 28 percent. 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 increased to 81 percent in 2016, up from 76 percent in 2015, according to an IPSOS survey. Whilst the brand has also attributed its growth in part to the sheer size of the ICT market, Huawei is setting standards in the industry. Toward the end of last year, the brand garnered approval for polar coding, pushing Huawei closer to being the industry leader in 5G technology. In light of this, the brand may see its value continue to rise in the following years.
Qualcomm is the fastest-growing telecom infrastructure brand, rising 65 percent in value to USD 6.8 billion. The continued success and development of the brand’s Snapdragon mobile processor products indicates the positive direction in which the brand is headed. However, legal disputes with Apple regarding allegations that Qualcomm receives unnecessary royalties as a result of charging based on handset retail price cast doubt on the brand’s strong performance.
The Federal Trade Commission (FTC) has sued Qualcomm for anti-competitive practices, whereby the brand would refuse to sell modems to companies that would not agree to its licensing terms. The FTC calls this a tax on competitor products, harming competition. This will undoubtedly bring unwanted regulatory attention to the brand. Whether reputational issues ensue or whether it adversely affects the brand’s value as a result remains to be seen.