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Contents
1. Introduction
2. Methodology
3. Key Issues
4. Brands Punching Above Their Weight
5. Brands Punching Below Their Weight
6. The Top 10
7. Biggest Regions
8. Regional Analysis
9. Country Analysis
10. The Top 100

 

1. Introduction

This is the first time the values of the world’s largest mobile telecoms brands have been published. The brands of those in the top 100 are collectively worth over $300bn. This is a heavily branded industry. With mobile services frequently generic – with little to choose from between competitors – brands are generally the main differentiator. They can inspire loyalty, help reduce customer churn, increase average revenues per user (ARPU), attract new customers and encourage existing ones to trial new services and related products.

 

The World’s Most Valuable Mobile Telecoms Brands 2008 identifies which brands are succeeding in building value for their shareholders and which brands require additional resource and attention. 500 of the world’s biggest operators were studied to produce the top 100. The telecoms industry is highly competitive and acquisitions are common.

 

2009 will be a testing year for all. The economic instability and uncertainty should drive investors to seek defensive havens in businesses with safe, strong, valuable brands. This publication highlights the most valuable brands and those with the biggest opportunities, both in developed and emerging markets.

 

Intangible Business would like to thank the people and organisations which have contributed to the production of this report and research. Special thanks goes to Informa Telecoms & Media, Mobile Telecommunications International and representatives from MTI Consulting.

 

2. Methodology

Brand values are a reflection of a brand’s ability to generate future income. It is a forward looking study that uses historic performance and future trends to predict future value. Three years of publicly available historical sales data was gathered for 500 of the world’s biggest telecoms brands. To determine the strength of the brands, each brand was also scored on nine hard measures, sourced from Informa Telecoms & Media, and nine measures of brand strength from a panel of industry experts. Using this data, each brand was then valued using the relief-from-royalty methodology to produce the top 100.

 

Definitions of components of brand strength

Hard measures
Turnover:  volume of branded mobile income
Subscriptions:  number of active subscribers attached to each brand
Customer churn:  proportion of customers leaving the brand annually
Market share:  average market share in each main market of mobile telecoms users
Penetration:  proportion of the market which has telecoms services
CAPEX:  volume of capital expenditure invested in future benefits
EBITDA:  earnings before interest, taxes, depreciation and amortization
ARPU:  average revenue per user
Profitability:  level of relative profitability of each brand

Panel measures
Share of market: measure of market share
Brand growth:  projected growth based on 3-5 years historical data and future trends
Price positioning:  a measure of a brand’s ability to command a premium
Market scope: number of markets in which the brand has a significant presence
Brand preference: a measure of relative pre-disposition or spontaneous selection of a brand
Brand awareness: a combination of prompted and spontaneous awareness
Brand relevancy: capacity to relate to the brand and a propensity to purchase
Brand heritage: a brand’s longevity and a measure of how it is embedded in local culture
Brand perception: loyalty and how close a strong brand image is to a desire for ownership

 

Calculating brand value
Brand values are a reflection of a brand’s ability to generate future income. So this is a forward looking study that uses historic performance and future trends to predict future activity. The actual brand valuation calculation is relatively straight forward. It attempts to derive the amount the brand owner would be willing to pay for its brand if it did not already own it. This approach is called the relief from royalty methodology as it calculates how much the brand owner is relieved from paying by virtue of owning the brand. The more complicated parts are the components that contribute to the calculation. These three stages illustrate the process, simply:

 

1. Forecast sales
Three years of historical sales data was gathered for 500 of the world’s biggest mobile operator brands. The top 100 brands have been given indefinite lives as they are all market leaders, with heritage and financially robust owners. The compound annual growth rate (CAGR) is adjusted to reflect the brand’s long term ability for growth. This reflects more accurately a brand’s growth prospects based on its current and historical performance.

 

2. Royalty rate
To determine the strength of the brands, each brand was scored on nine measures of brand strength, provided from qualitative panel data. This included share of market, growth, price positioning, market scope, preference, awareness, relevance, heritage and perception.

 

Each brand was also measured on three years of hard data including turnover, subscriptions, churn, market share, growth, penetration, average revenue per user (ARPU), and profitability. The average of these two total scores (panel brand score and hard brand score) was then positioned between a royalty rate range. This determines a unique royalty rate for each brand.

 

The royalty rate appears to be a simple percentage but in fact this hides the depth of understanding required to determine a rate that reflects accurately the profit/cash flow generated by the brand alone – separate from other elements of product delivery.

 

3. Discount rate
Future sales are then multiplied by the royalty rate and reduced at the relevant tax rate. They are then multiplied by a discount rate to calculate the net present value of those future cash flows. The discount rate reflects the time value and risk attached to those cash flows and for the purpose of this exercise has been left at a flat 9% as these are relatively low-risk, established brands.

 

Testing
Results are tested and verified by sense-checks, such as to comparable commercial transactions, and referenced to proprietary information on the value of leading brands, which all share similar characteristics of value cash flow generation. These valuations are based on an analysis of publicly available information and do not necessary reflect true past or future performance.

 

3. Key Issues

Economy
Telecoms firms are traditionally resilient to economic woes. However, few industries look likely to be immune from the negative impact of the current financial crisis which is truly global. The telecoms industry will be no exception. Brands will suffer but with this comes opportunity for strong brands to steal market share from the weaker. Hatches need battening down, focus needs sharpening and all brands will need to understand what drives their value.

 

Brand Portfolios
Following acquisitions the dilemma always exists of whether to keep the brand or transition another brand in its place. Different operators take different approaches. In Hungary for instance, Telnor owns and operates the Pannon brand using the Telenor blue logo whereas in other countries the Telenor name is used with the same logo. Telefónica uses its own brand as well as others including Movistar and O2. América Móvil also has the Claro and Telcel brands. Would it be better for these companies to merge their portfolio of brands into one dominant brand? Local brands can have substantial traction which, if dislodged, would be extremely detrimental. Generally, however, transitioning these brands into one dominant brand in a sensitive fashion would increase the value of the whole.

 

Emerging Markets
Africa, China, India and Latin America present the biggest opportunities for mobile operators with the sheer size of the populations and economic growth prospects. These markets have experienced significant growth in recent years attracting considerable interest from international, acquisitive groups. As growth stagnates in more developed markets of Europe and the US the attraction in emerging markets will only increase.

 

Consolidation
Further consolidation is inevitable with synergies from merging operations, the desire for cross-border brands and financial instability making more deals look attractive. Customers are generally the main motivation for acquisitions in the telecoms industry. However, as customer relationships are generally with the brand, particular attention needs to be given to brand due diligence prior to the acquisition.

 

4. Brands Punching Above Their Weight
(The difference between a brand’s rank by income and rank by brand value.)

 

1. Mobily, $1,514m,  +23 places
Mobily, the trade name of Saudi Arabian based Etihad-Etisalat, is one of the fastest growing mobile telecoms operators in the world. Its subscription base has grown from just over 2m in 2005 to over 10m and its income has grown similarly. With a low customer churn its customers are loyal and with future growth opportunities in the region and beyond, Mobily is one to watch.

 

2. Qtel, $802m, +18 places
Qtel is ambitious, illustrated by its recent investment in Indosat. This ambition, coupled with one of the highest ARPU (average revenue per user) levels in the world – helped by its exclusivity in Quatar - and impressive growth in revenue and subscriber numbers, has helped Qtel’s brand rank 18 places higher then it does by income.

 

3. PMCL (Mobillink), $787m, +17 places
With the backing of the deep-pocketed Orascom, PMCL is the largest mobile telecoms operator in Pakistan with a market share of 40%. This dominance, low churn rate and Pakistans’ large and growing population has helped PMCL punch well above its weight – also helped by the strength of its brand, rated the joint best by the expert panel. If PMCL continues to capitalize on this solid platform, it has a significant opportunity.

 

4. Airtel, $2,809m, +14 places
Bharti Airtel’s keen focus on its Airtel brand has paid off. The brand is growing at around 70% a year and has well in excess of 50m subscribers. With India having a relatively low rate of mobile penetration there is still plenty of scope left for the brand. As India is a highly competitive market with a number of domestic and foreign rivals, there is no room for Airtel to become complacent.

 

5. Tata Indicom, $922m, +13 places
Another brand benefiting from the growing Indian telecoms market is Tata Indicom, part of the Tata Group which has revenues of over $60bn in 2008. Tata Indicom is the fourth largest mobile telecoms brand in India with a significant and growing customer base which has virtually no churn.

 

6. Reliance, $1,878m, +11 places
7. Viettel, $536m, +11 places
8. Kyivstar, $1,046m, +10 places
9. Zain, $2,343m, +9 places
10. Movilnet, $931m, +9 places

 

5. Brands Punching Below Their Weight
(The difference between a brand’s rank by income and rank by brand value.)

 

1. Tellas, $398m, -18 places
The Greek telecoms operator Tellas is ranked 18 places lower by brand value than it is by turnover. Its combined brand score is the lowest in the top 100 at 25% and was given the lowest score by the panel of experts. Its mono-market status and unfavourably considered brand contribute towards this relatively poor performance.

 

2. MetroPCS, $579m, -18 places
Despite having over 4m subscribers, MetroPCS is one of the smaller mobile operators in the US and has one of the lowest annual rates of turnover growth. Its commitment to flat rate billing differentiates the brand but unless it can communicate this benefit effectively this could serve to limit the brand’s relevance and expansion.

 

3. Vivo, $1,648m, -13 places
Ranking 13 places lower by brand value than it does by turnover, Vivo appears to be struggling. This lack of direction is reflected in Vivo’s brand scores which highlight particularly the brand’s lack of heritage. With its dominant position, ownership by Portugal telecoms and Telefónica, and with renewed attention on its brand, however, Vivo is well placed to capitalise on Brazil’s economy and size.

 

4. Proximus, $786m, -13 places
Proximus is the largest of Belgium’s three mobile operators with nearly 5m subscribers. Its number of customers and turnover, however, are both lower than its main rival Mobistar which is gradually catching up. Proximus has a high customer churn, an increasingly low ARPU and is at risk of losing yet more value to faster growing rivals Mobistar and Base.

 

5. Chunghwa telecoms, $630m -12 places
Chunghwa telecoms is the largest mobile operator in the Republic of China (Taiwan) with nearly 9m customers. Having enjoyed government-owned status for so long, the brand appears to be failing to adapt to privatisation and free market competition, with a declining ARPU and falling 12 places lower by brand value than it is by turnover.

 

6. Bouygues Télécom, $2,014m, -10 places
7. Cellcom, $483m, -10 places
8. Wind, $1,464m, -8 places
9. US Cellular, $1,222m, -8 places
10. Teliasonera, $1,172, -8 places

 

6. The Top 10

1. $30.8bn China Mobile
With 400m subscribers and 20% annual revenue growth driving income to near $50bn in 2007, China Mobile is the world’s biggest mobile telecoms operator. It also has the world’s most valuable telecoms brand, worth $30.8bn. The China Mobile brand was also scored the highest by the panel of industry experts and has the strongest overall brand score. Since losing its monopoly China Mobile has continued to be the dominant operator, a status it is set to continue enjoying.

 

2. $22.1bn Vodafone
Britain’s Vodafone group is the world’s second biggest mobile operator by both revenue and subscribers. Its brand is the most geographically spread and is the second most valuable telecoms brand in the world, worth $22.1bn. Its marketing investments, distinctive speech mark logo and vivid red colouring aid the brand’s standout and the company’s consistently acquisitive and nimble management will ensure brand value continues to grow with the company.

 

3. $20.4bn Verizon Wireless
As the biggest mobile operator in the US with revenues of $43bn, Verizon enjoys a customer base of over 70m. The brand’s significant advertising spend and 2,600 stores and kiosks through the country ensure Verizon’s constant and consistent visibility. Verizon’s relatively high ARPU and positive associations with the brand will contribute towards maintaining and developing the brand’s equity.

 

4. $18.9bn AT&T
AT&T has the largest subscriber base in the US with over 70 customers. In the US, AT&T’s brand also scores the best by hard measures, from the panel and consequently its total average score, benefiting from its association with Apple’s iPhone. AT&T also scores the highest for awareness, relevance and heritage, despite being a relative newcomer in the world of mobile telecoms, only formed in January 2007 having rebranded from Cingular.

 

5. $16.9bn T-Mobile
Deutsche Telekom’s T-Mobile has built its European presence largely through acquisitions, acquiring and consequently rebranding incumbents in Croatia, Czech Republic, Hungary, Montenegro, Netherlands, Poland, Slovakia and the UK since 2002. This relative lack of heritage was recognized by the expert panel, contributing to T-Mobile’s low brand value ranking relative to its income. With nearly 30m of its 100m subscribers in the US, however, T-Mobile is establishing a good position there.

 

6. $15.5bn Orange
Since its acquisition by France telecoms in 2000, nearly all of France Telecom’s operations have been rebranded Orange. Orange is one of the most established mobile telecoms brands, looking forward to its 15th birthday in April 2009. This heritage has helped lower its rate of customer churn and is noted as Orange’s biggest strength. This contributes to the brand punching two places above its weighted relative to its size by income – testament to the value of its brand.

 

7. $14.9bn NTT DoCoMo
NTT DoCoMo is Japan’s biggest mobile operator by revenue and subscribers, with over 50m of them. The brand is ranked as the third strongest in the world by the expert panel, with its heritage, level of awareness and relevance particularly rated. However, it is ranked two places lower by brand value than it is by size in the top 100. NTT DoCoMo’s limited exposure outside its domestic market reduces the brand’s value, although with this comes opportunity.

 

8. $14.5bn KDDI
Hot on NTT DoCoMo’s heels is KDDI, Japan’s second biggest mobile operator and eighth most valuable telecoms brand in the world. The brand’s mission to be ‘For Everyone and for Every Way They Communicate’ seems to be working. With a market share of over 20%, compared to NTT DoCoMo’s near 50%, KDDI is punching above its weight relative to its larger competitor.

 

9. $10.8bn Movistar
Movistar is Telefónica’s biggest and most valuable brand, behind O2. The Movistar brand resonates well in Spanish markets. It is the dominant operator in its domestic Spain, following its historical monopoly, and enjoys a significant presence in Latin American markets including Mexico, Chile, Venezuela, Brazil and Peru. Movistar’s related fixed line and internet services provide additional support to the brand in the mobile market.

 

10. $9.7bn Sprint
With the integration of Nextel complete and the Nextel brand absorbed within Sprint, the Sprint brand now has a strong platform for growth. It is already the third largest mobile operator in the US with over 50m customers and with several other smaller operators in the US, the brand has room for both organic and acquisitive growth. However, Sprint’s average brand score is relatively low compared to Verizon and AT&T which indicates further work is required.

 

7. The Biggest Regions
See report pdf for detail

8. Regional Analysis
See report pdf for detail

9. Country Analysis
See report pdf for detail

10. The Top 100
See report pdf for detail