Tuesday, 20 May 2014 18:20

Verizon tops telco brand values at US$53.5 billion

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US telco giant Verizon is now the world’s most valuable telecoms brand, currently worth US$53.5 billion, following its acquisition last February of Vodafone’s 45% indirect interest in its Wireless subsidiary, according to a newly published report.

The other big US telecommunications operator, AT&T, slips in to second place in the global brand value rankings, with a value of $45.4 billion and an AA rating.

Verizon’s massive 74% brand value growth, according to the Brand Finance Telecoms report, is primarily the result of rapidly rising revenues and an upgraded brand rating to AAA-.

Brand Finance says Verizon has finally come of age, acquiring Vodafone’s 45% stake in Verizon Wireless “to take full charge of its own affairs.”

And, according to the report, the deal between Verizon and Vodafone has been a successful move for both telcos, with Vodafone’s $130 billion windfall from the sale of its stake boosting its financial performance and helping to increase its brand value by 10% to US$29.6 billion.

Interestingly, despite the enormous growth across the board in the telecoms sector, Brand Finance CEO David Haigh says that the tech sector has grown faster.

“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.”

Haigh says 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,” Haigh suggests.

Though Vodafone has performed well, Brand Finance reports, however, that the UK company’s brand rank has slipped due to the rapid rise of T (Deutsche Telekom) and China Mobile.

According to Brand Finance, 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 urbanised, 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 report says.

 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



Brand Finance also reports that telco operator brands have, however, 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).

According to Brand Finance, 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,” the report warns.

David Haigh says that 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 also reports on the top telco infrastructure providers, listing Cisco unchallenged as number one with its brand value rising 34% to US$20.8 billon – more than the value of the rest of the top five combined -  and with a triple-A rating.

Sitting second behind Cisco in the infrastructure provider brand value stakes is Ericsson followed by Qualcomm, Alcatel-Lucent and Motorola.

Brand Finance notes, however, that Alcatel-Lucent is the fastest riser of the five infrastructure providers.

According to the report, a huge, €1 billion (Euro) cost cutting exercise involving management changes, asset sales and a 14% reduction in the size of its workforce has restored investor confidence in Alcatel-Lucent. “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-


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Peter Dinham

Peter Dinham - an iTWire treasure is a mentor and coach who volunteers also a writer and much valued founding partner of iTWire. He is a veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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