Apple was the world’s most valuable telecoms brand as of December 2012.
Brand valuation and marketing outfit Brand Finance released its annual Telecoms 500 report which listed the world’s most valuable telecoms brands.
Brand value was essentially the cost a third party would have to pay to license the use of a brand, the company said.
The segment of Apple’s brand derived from handsets topped the table with brand value growth of $US21 billion to $US48.8 billion ( £32.7 billion), as smartphone uptake continued and smaller rivals such as HTC and Blackberry struggled.
Rival Samsung however more than doubled the handsets segment of its brand, growing 121% to $US23.7 billion ( £15.9 billion).
Verizon came in at number two, as the most valuable operator and the second most valuable telecoms brand, at $US30.7 billion ( £20.6 billion). This illustrated the growth of Verizon Wireless in particular, Brand Finance said, which was America’s second largest mobile operator. Vodafone, a 45% stake holder in the company, had seen its share price rise sharply following rumours that Verizon were looking to take full control of Wireless and would pay over the odds to do so, Brand Finance said.
“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 and Virgin Media.”
Vodafone itself fell from the number one spot in the table, which it had held since the start of the report in 2010, to fourth place, with more than $US3 billion ( £2 billion) brand value lost, Brand Finance said.
The drop was in part due to minor falls in brand strength and projected long term prospects, but the major factor was that in moving their headquarters from Ireland to the UK, they were subjected to a more onerous tax regime, a Brand Finance spokesman said.
Telefonica’s Movistar brand’s value fell $US3.3 billion ( £2.2 billion), the largest ‘faller’ and O2 fell $US85 million ( £56.97 million). Orange fell from fifth to seventh in the table, with a brand value drop of $US2.2 billion ( £1.47 billion).
Shift in power balance
Brand Finance chief executive David Haigh said the rise of Apple and Samsung represented a shift in the power balance between mobile operators and handset manufacturers.
“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.”
Brand Finance determined the value of a brand in relation to the royalty rate payable for its use if it were owned by a third party. This rate was applied to future revenue to determine an earnings stream attributable to the brand. This stream was then discounted back to a net present value, Brand Finance said.
This was a six-step process, where specific financial and revenue data was obtained first and involving modelling the market demand in the context of other market competiros and forecast periods used from Institutional Brokers Estimate System and historic growth. The royalty rate is then calculated using brand strength and attributes such as financial, market share and profitability, then the future post-tax royalty income strem, the discount rate specific to each brand and the net present value (brand value). A full break down is here.
Put simply, brand strength analysis bench marked the strength, risk and future potential of a brand relative to its competitors, taking into account financial metrics such as average revenue per customer. This was used to calculate the royalty rate, which was then combined with revenue figures to determine the brand value, a Brand Finance spokesman said.
“This means that it is possible for a fairly weak brand with large revenues to still have a significant brand value while an extremely strong brand, because it caters to a only a niche market, may not have as big a brand value as a consumer mass-market giant.”