Telcos face the prospect of falling brand capital

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Telcos face the prospect of falling brand capital

Brands are very important when it comes to retaining the edge in business, and in a recent ranking of the top 500 brands in the world, it was found that technology firms were buoyant, but the position of telecoms providers was generally sinking.

The top five brands were all titans of the internet - Google, Apple, Amazon, Facebook and Samsung. These had all demonstrated big leaps in the value of their brands over the past year. Amazon topped the list, with its brand being valued at $150 billion, which was a 42 per cent increase from the year before. Amazon is now the most valuable brand in the world.

The ranking was carried out by Brand Finance, a consultancy specialising in brand valuation and measuring intangible assets. The brand ranking is not necessarily a reflection of a company’s current market performance, but it takes a number of factors into account which give an estimation of how important that brand is in the marketplace and what may lie in store for it.

Telecoms have not fared quite as favourably in the Brand Finance ranking. Verizon and AT&T remain within the top 10, but the value of these brands has fallen by 5 per cent. The value of the AT&T brand was put at $82 billion and Verizon’s brand was valued at $62 billion.

Various factors are weighed up when considering what the brand of a company is worth. One element is the strength of the brand, composed of indicators such as perception, financial performance and customer loyalty. Another facet is the brand’s value - or the value of the trademark. There is the brand’s enterprise value, derived from what the total value of the business is, and the brand contribution, which is the boost that a business receives when its products carry a specific brand, as opposed to being simply generic.

Another telecoms company not doing so well in the brand stakes is Vodafone, with its brand value falling 14 per cent to $18.5 billion. The ranking of British Telecom also declined, falling from number 117 to 133. Other mobile and office based telephony solutions providers. such as O2, Telia (of Sweden), Telenor (of Norway) and KT Corporation (formerly known as Korea Telecom and the largest mobile and office based telephony solutions provider in South Korea) dropped. Deutsche Telekom fell four places in the rankings, though the value of its brand did increase. Sky also dipped.

However. it was not all doom for telcos. China Telecom jumped 36 per cent in value to nearly $24 billion, nestling in at position 47. The value of Orange also increased by 3 per cent, and its ranking moved up one slot to 51.

Nevertheless, the general trends reflect larger movements worldwide. The provision of mobile and office based telephony solutions is being dominated by newer technology companies,and streaming services and VOIP systems are all benefiting from innovation in services and greater customer interaction. It appears that telecoms providers are being viewed as the suppliers of hardware to transmit information, while all the interesting and valuable add ons - along with most of the profits - are the province of technology and internet companies.

To stay relevant, the telcos will need new business models for the digital age.