Vodafone loses ground and Australian Telcos pick up speed
Announcement posted by StrategyCo 19 Mar 2013
Brand Finance Global Telecoms 500 study released for 2013
Brand Finance, the leading brand valuation and marketing experts have today released their annual Telecoms 500 study. The report, which lists the world’s most valuable telecom brands, shows that several network operators have faced a very challenging year whilst Australian Telcos have weathered the economic instability affecting their counterparts in other parts of the world.
Australian Telco Telstra has dropped two places to become the world’s 27th most valuable Telecoms Brand, with a total brand value of US$6.1b. However, while it fell two places it actually increased its brand value by US$777m after recently posting profits of more than $1.6 billion.
Optus has also much to cheer about, gaining ground with a growth in brand value of $US446m. This saw it rise five places to 51st on the list of most valuable Telecoms Brands. Other significant upward movement saw Sensis and TPG Telecom increase their brand values by US$107m and US$67m respectively.
Commenting on the results, Brand Finance Australia Managing Director, Xander Bird said: “Telstra’s brand has performed well, which is important given the potential breakup of the business in the rollout of the National Broadband Network (NBN). As the market changes it is imperative for Telstra to keep its brand fresh, to ensure that it can still capitalise on its brand going forward”.
Australia’s Most Valuable Telco Brands
Source: The BrandFinance® Telecoms 500 (2013), figures to 1 decimal place
Whilst overseas, European providers in particular have suffered significant losses. Spain’s Telefónica has taken a double hit; its Movistar brand’s value has been cut by $3.3bn, making it this year’s biggest faller, while the UK’s O2 has also lost brand value, though a more modest $85m. France’s Orange has fallen from 5th to 7th in the table following a 12% brand value fall of $2.2bn. Overall, global mobile phone sales fell 3% in 2012 with consumers in struggling Eurozone economies with high unemployment rates, cutting back. Most dramatically the UK’s Vodafone, which has ranked number 1 in the BrandFinance® Telecoms 500 since its inception in 2010, has fallen to 4th. Over US$3bn of lost brand value means its brand is now worth just over US$27bn while its brand strength has been downgraded from a near-perfect AAA+ to AAA.
Verizon of the USA, in which Vodafone owns a 45% stake, was once a minor player but has now leapfrogged the UK giant to become the world’s most valuable operator and second most valuable telecommunications brand. Its brand value of US$30.7bn illustrates the impressive growth of Verizon Wireless in particular, now the America’s 2nd biggest mobile operator. Vodafone’s share price has risen sharply in recent weeks following rumours that Verizon are keen to take full control of Wireless and are willing to pay over the odds to do so. Managing the sale carefully could prove crucial to Vodafone’s future as the windfall could help it cover outstanding tax liabilities and more importantly invest in developing a ‘quad-play’ offering to counter the challenge from integrated rivals such as BT (British Telecom) and Virgin Media.
The World's Most Valuable Telecoms Brands
Source: The BrandFinance® Telecoms 500 (2013), figures to 1 decimal place
Power Shifts from Operator Brands as Handsets Control Consumer Choice
The most striking change of all however is illustrated by 2013’s most valuable Telecoms brand. The handsets segment of the Apple brand* has surged to the top of the table following brand value growth of US$21bn. As smartphone uptake continues and smaller rivals such as HTC, Blackberry and Nokia struggle, Apple has gained market share and grown its brand value by 77% in the face of its volatile share price. Samsung too has had a successful year. The segment of its brand* derived from handsets has more than doubled this year, growing 121% to US$23.7bn, making it this year’s fastest riser.
The rise of Apple and Samsung represents a shift in the power balance between mobile operators and handset manufactures. For operators, voice and even data are no longer enough, with threats from all sides they must act quickly to embrace quadruple-play or face falling sales and eroding margins.
For the full results of the BrandFinance® Telecoms 500 please click here and for further insight and analysis please read the latest edition of Total Telecom.
ENDS
*The brand values for Apple and Samsung in the BrandFinance® Telecoms 500 include only the contribution from handsets. The total brand values for Apple and Samsung, as reported in the BrandFinance® Global 500 are US$87.3bn and US$57.8bn respectively.
Media Contact:
Maree Schneiders
StrategyCo
T: +61 (0)411 446 484
E: maree@strategyco.net
W: www.strategyco.net
Methodology:
The methodology used in calculating the brand values uses a discounted cash flow (DCF) technique to discount estimated future royalties at an appropriate discount rate and to arrive at a new present value (NPV) of the trademark and associated intellectual property rights in order to compute brand value.
Royalty Relief Approach
The royalty relief methodology determines the value of the brand in relation to the royalty rate that would be payable for its use if it were owned by a third party. The royalty rate is applied to future revenue to determine an earnings stream that is attributable to the brand. The brand earnings stream is then discounted back to a net present value.
There is a six-step process involved in making the brand value calculations:
Australian Telco Telstra has dropped two places to become the world’s 27th most valuable Telecoms Brand, with a total brand value of US$6.1b. However, while it fell two places it actually increased its brand value by US$777m after recently posting profits of more than $1.6 billion.
Optus has also much to cheer about, gaining ground with a growth in brand value of $US446m. This saw it rise five places to 51st on the list of most valuable Telecoms Brands. Other significant upward movement saw Sensis and TPG Telecom increase their brand values by US$107m and US$67m respectively.
Commenting on the results, Brand Finance Australia Managing Director, Xander Bird said: “Telstra’s brand has performed well, which is important given the potential breakup of the business in the rollout of the National Broadband Network (NBN). As the market changes it is imperative for Telstra to keep its brand fresh, to ensure that it can still capitalise on its brand going forward”.
Australia’s Most Valuable Telco Brands
| Australian Rank 2013 | Global Rank 2013 | Global Rank 2012 | Brand | Domicile | Brand Value 2013 (US$m) | Brand Value 2012 (US$m) | Change (US$m) | Brand Rating 2013 | Brand Rating 2012 |
| 1 | 27 | 25 | Telstra | AUSTRALIA | 6,060 | 5,283 | 777 | AA+ | AA |
| 2 | 51 | 56 | Optus | AUSTRALIA | 2,974 | 2,528 | 446 | AA | AA |
| 3 | 136 | 145 | Sensis | AUSTRALIA | 683 | 576 | 107 | A+ | AA- |
| 4 | 242 | 290 | TPG Telecom | AUSTRALIA | 213 | 146 | 67 | A | A |
| 5 | 348 | 404 | M2 | AUSTRALIA | 78 | 64 | 14 | A | A |
| 6 | 393 | 500 | Amcom Telecom | AUSTRALIA | 53 | 31 | 23 | A | A |
| 7 | 424 | 489 | Service Stream | AUSTRALIA | 43 | 32 | 11 | A | A |
| 8 | 434 | N/A | Macquarie Telecom | AUSTRALIA | 40 | N/A | N/A | A | N/A |
| 9 | 445 | 444 | Codan | AUSTRALIA | 37 | 47 | (10) | A | A+ |
Whilst overseas, European providers in particular have suffered significant losses. Spain’s Telefónica has taken a double hit; its Movistar brand’s value has been cut by $3.3bn, making it this year’s biggest faller, while the UK’s O2 has also lost brand value, though a more modest $85m. France’s Orange has fallen from 5th to 7th in the table following a 12% brand value fall of $2.2bn. Overall, global mobile phone sales fell 3% in 2012 with consumers in struggling Eurozone economies with high unemployment rates, cutting back. Most dramatically the UK’s Vodafone, which has ranked number 1 in the BrandFinance® Telecoms 500 since its inception in 2010, has fallen to 4th. Over US$3bn of lost brand value means its brand is now worth just over US$27bn while its brand strength has been downgraded from a near-perfect AAA+ to AAA.
Verizon of the USA, in which Vodafone owns a 45% stake, was once a minor player but has now leapfrogged the UK giant to become the world’s most valuable operator and second most valuable telecommunications brand. Its brand value of US$30.7bn illustrates the impressive growth of Verizon Wireless in particular, now the America’s 2nd biggest mobile operator. Vodafone’s share price has risen sharply in recent weeks following rumours that Verizon are keen to take full control of Wireless and are willing to pay over the odds to do so. Managing the sale carefully could prove crucial to Vodafone’s future as the windfall could help it cover outstanding tax liabilities and more importantly invest in developing a ‘quad-play’ offering to counter the challenge from integrated rivals such as BT (British Telecom) and Virgin Media.
The World's Most Valuable Telecoms Brands
| Rank 2013 | Rank 2012 | Brand | Domicile | Brand Value 2013 (US$bn) | Brand Value 2012 (US$bn) | Change (US$bn) | Brand Rating 2013 | Brand Rating 2012 |
| 1 | 4 | Apple | US | 48.4 | 27.4 | 21.0 | AAA+ | AAA |
| 2 | 3 | Verizon | US | 30.7 | 27.6 | 3.1 | AA+ | AA |
| 3 | 2 | AT&T | US | 30.4 | 28.3 | 2.1 | AA+ | AA+ |
| 4 | 1 | Vodafone | UK | 27.0 | 30.0 | -3.0 | AAA | AAA+ |
| 5 | 12 | Samsung | South Korea | 23.7 | 10.8 | 12.9 | AAA- | AAA |
| 6 | 6 | China Mobile | Hong Kong | 23.1 | 18.0 | 5.1 | AA | AA |
| 7 | 5 | Orange | France | 16.3 | 18.6 | -2.3 | AA+ | AA+ |
| 8 | 8 | Cisco | US | 15.5 | 12.9 | 2.6 | AAA- | AAA- |
| 9 | 15 | NTT | Japan | 14.3 | 13.2 | 1.1 | AA | AA- |
| 10 | 9 | Comcast | US | 12.8 | 12.5 | 0.3 | AA+ | AA+ |
Power Shifts from Operator Brands as Handsets Control Consumer Choice
The most striking change of all however is illustrated by 2013’s most valuable Telecoms brand. The handsets segment of the Apple brand* has surged to the top of the table following brand value growth of US$21bn. As smartphone uptake continues and smaller rivals such as HTC, Blackberry and Nokia struggle, Apple has gained market share and grown its brand value by 77% in the face of its volatile share price. Samsung too has had a successful year. The segment of its brand* derived from handsets has more than doubled this year, growing 121% to US$23.7bn, making it this year’s fastest riser.
The rise of Apple and Samsung represents a shift in the power balance between mobile operators and handset manufactures. For operators, voice and even data are no longer enough, with threats from all sides they must act quickly to embrace quadruple-play or face falling sales and eroding margins.
For the full results of the BrandFinance® Telecoms 500 please click here and for further insight and analysis please read the latest edition of Total Telecom.
ENDS
*The brand values for Apple and Samsung in the BrandFinance® Telecoms 500 include only the contribution from handsets. The total brand values for Apple and Samsung, as reported in the BrandFinance® Global 500 are US$87.3bn and US$57.8bn respectively.
Media Contact:
Maree Schneiders
StrategyCo
T: +61 (0)411 446 484
E: maree@strategyco.net
W: www.strategyco.net
Methodology:
The methodology used in calculating the brand values uses a discounted cash flow (DCF) technique to discount estimated future royalties at an appropriate discount rate and to arrive at a new present value (NPV) of the trademark and associated intellectual property rights in order to compute brand value.
Royalty Relief Approach
The royalty relief methodology determines the value of the brand in relation to the royalty rate that would be payable for its use if it were owned by a third party. The royalty rate is applied to future revenue to determine an earnings stream that is attributable to the brand. The brand earnings stream is then discounted back to a net present value.
There is a six-step process involved in making the brand value calculations:
- Obtain specific financial and revenue data.
- Model the market to identify market demand and the position of individual brands in the context of all other market competitors. There are three forecast periods used:
- historical financial results up to 2012. Where these are not available using Institutional Brokers Estimate System (IBES), consensus forecasts are used;
- a five-year forecast period (2012-2016), based on three data sources (IBES, historic growth and GDP growth); and
- perpetuity growth, based on a combination of growth expectations (GDP and IBES).
- Calculate the royalty rate for each brand by:
- calculating brand strength – on a scale of 0-100, according to the number of attributes such as financial, brand equity, market share and profitability, among others;
- using brand strength to determine βrandβeta® index score; and
- applying Brand Strength Score to the royalty rate range to determine the royalty rate for the brand. The royalty rate is determined by a combination of the sector of operations, historic royalties paid in that sector and profitability of the company.
- Calculate the future post-tax royalty income stream.
- Calculate the discount rate specific to each brand, taking account of its size, geographical presence, reputation, gearing and brand rating.
- Discount future royalty stream (explicit forecast and perpetuity periods) to a net present value – ie. the brand value
Brand Ratings
These are calculated using Brand Strength analysis, which benchmarks the strength, risk and future potential of a brand relative to its competitors on a scale ranging from AAA to D. It is conceptually similar to a credit rating. The data used to calculate the ratings is taken from a variety of sources including Bloomberg, annual reports and proprietary research by Brand Finance. Note: The AAA to A ratings can be altered by including a plus (+) or minus (-) sign to show their more detailed positioning
Valuation Date
All brand values in the Telecoms 500 are for the end of the year, 31 December 2012.
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