Branded! How much is your telecoms name worth?

via Flickr © Anne Worner (CC BY-SA 2.0)

via Flickr © Anne Worner (CC BY-SA 2.0)

How powerful and how valuable are the world’s telecoms-related brands? A consultancy called Brand Finance says it “puts thousands of the world’s top brands to the test including the top 500 telecom operators and the top 10 infrastructure brands.” It does this every year. So running into MWC is a good time to see who is up, who is down and who is nowhere.

The World’s Most Valuable Telecoms Brands (Top 10 Operators)

Rank 2016

Rank 2015

Brand

Domicile

Brand Value 2016

Brand Rating 2016

BV change

Brand Value 2015

Brand Rating 2015

1

1

Verizon

US

63,116

AAA-

5%

59,843

AAA-

2

2

AT&T

US

59,904

AA+

2%

58,820

AA+

3

3

China Mobile

China

49,810

AAA-

4%

47,916

AAA-

4

4

T (Deutsche Telekom)

Germany

33,194

AA+

7%

31,108

AA+

5

5

Vodafone

UK

27,820

AA+

2%

27,287

AA+

6

9

SoftBank

Japan

19,135

AA

19%

16,039

AA

7

6

Orange

France

19,096

AA+

-4%

19,867

AA+

8

8

BT

UK

18,442

AAA-

14%

16,175

AAA-

9

10

NTT

Japan

18,186

AA

23%

14,734

AA

10

New

Xfinity

US

17,186

AA+

na

na

na

The top 10 for both sides of the industry probably has few surprises. As happened last time, Verizon wins the operator Top 10 and is now well ahead of AT&T (Verizon’s acquisition of AOL was apparently deemed a brand-building plus - arguable).  Deutsche Telekom is fourth behind China Mobile. Below Vodafone in position five the values plummet down to the late teens in $billions. Xfinity is a new entry at 10 and Softbank has dropped 3 places.

The World’s Most Valuable Telecoms Brands (Top 10 Infrastructure)

Rank 2016

Rank 2015

Brand

Domicile

Brand Value 2016

Brand Rating 2016

BV change

Brand Value 2015

Brand Rating 2015

1

2

Huawei

China

19,743

AA

70%

11,621

AA

2

1

Cisco

US

19,162

AAA-

17%

16,339

AAA-

3

3

Ericsson

Sweden

9,445

AA+

3%

9,157

AA+

4

4

Qualcomm

US

4,138

AA

-17%

4,994

AA+

5

7

Nokia

Finland

3,039

AA

37%

2,212

AA-

6

6

ZTE

China

2,992

AA

-13%

3,437

AA

7

5

Alcatel-Lucent

France

2,490

AA-

-36%

3,881

AA

8

8

Corning

US

1,861

AA+

-3%

1,916

AA+

9

10

Harris Corp

US

1,205

AA-

25%

963

AA

10

9

Juniper Networks

US

1,116

AA-

-34%

1,691

AA

On the infrastructure side, Huawei is king of the hill, apparently on the back of soaring smartphone sales, according to Brand Finance, and has thus supplanted Cisco. Even though Nokia and Alcatel-Lucent are now one, Brand Finance has missed a trick by giving them separate rankings - it would have been interesting to see how much (or how little) difference their joint ranking has made.

So to make sense of the ranking you might want to know how Brand Finance rates brand value.

Methodology

A “brand is the focus for all the expectations and opinions held by customers, staff and other stakeholders about an organisation and its products and services,” it says. There’s actually a ISO standard for valuing brands (which Brand Finance claims it helped to craft),  and that defines a brand as “a marketing-related intangible asset including, but not limited to, names, terms, signs, symbols, logos and designs, or a combination of these, intended to identify goods, services or entities, or a combination of these, creating distinctive images and associations in the minds of stakeholders, thereby generating economic benefits/value.”

Another way in to this is to define a ‘Brand Contribution’ as the total economic benefit that a business derives from its brand, from volume and price premiums over generic products to cost savings over less well-branded competitors.

That’s the brand ‘thing’ - how is the brand value calculated? Brand Finance says there are seven steps.

  1. Calculate brand strength on a scale of 0 to 100 based on a number of attributes such as emotional connection, financial performance and sustainability, among others. This score is known as the Brand Strength Index.
  2. Determine the royalty rate range for the respective brand sectors. This is done by reviewing comparable licensing agreements sourced from Brand Finance’s extensive database of license agreements and other online databases.
  3. Calculate royalty rate. The brand strength score is applied to the royalty rate range to arrive at a royalty rate. For example, if the royalty rate range in a brand’s sector is 0-5% and a brand has a brand strength 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 estimating a proportion of parent company revenues attributable to a specific brand.
  5. Determine forecast brand specific 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.

There you have it. There seems to be a lot subjective wet finger waving if you ask me. Just don’t try steps 1 to 7 at home.

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