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The rise (again) of telco brand value

April 13, 2021 - David McGlew

David McGlew, Marketing Director, discusses how the accelerated move to on-line economies and 5G will drive up the value of telco brands

I was struck by a recent news headline measuring the relative value of Brands.  It called out the increase in value of eir, a local Irish CSP, whose brand value had increased by 16%. This increase was the 2nd biggest increase of the 25 brands measured and was remarked on because eir has had some very public customer service issues in 2020.  This increase caught my attention and made me wonder what the drivers for it were. So delving further, it turns out that the importance of connectivity for individuals and businesses forced to work from home during the pandemic is a key factor in the increase in value.

In the Irish context this bucked the trend where the total value of Ireland’s top 25 most valuable brands has dropped from €20.3 billion in 2020 to €17.5 billion in 2021. Across the top 25 brands measured, on average, they lost 11% of their brand value year on year.  eir saw its brand value increase by 16% to €608 million.

So is this a uniquely Irish thing or are other telco’s seeing their value increase as a result of the shift in work and leisure behaviour since the pandemic?  Looking at similar audits of other markets internationally and their findings are interesting.  If we look at Spain, the sum of the 100 most valuable brands in Spain has lost 13.4% of the value year on year.  Telecommunications and Beer were the sectors with the most brands that increase brand value.  Telco brands Yoigo (+ 20.1%), Pepephone (+ 16.8%) and MasMóvil (+ 29.0%) have reached the top 10 of those that grew the most in the Spanish inter-sector ranking of 2021.

This is due to its extraordinary effort to keep Spain connected and its networks have been the ones that have offered the best performance during the crisis of Covid-19 according to different studies.

Meanwhile in France, Orange regains the title of the most valued French brand in 2021. The Orange brand was valued at €16.25 billion and Orange was named Best Mobile Network for the tenth consecutive year. 

So has the pandemic, with the focus on digital connectivity, highlighted the value in a previously undervalued Telecoms sector? And what do telcos need to do to underline and grow this value?  

Connectivity has played an increasingly important part in all our lives over the last year, from the reliability of Zoom calls to binge watching Tiger king, underling the importance of the telco for all of us.  10 years ago these telco’s spent billions rolling out 4G networks only to see the Over the Top (OTT) players like Google and Facebook usurp them, regulating them to ‘Dumb Pipe’ providers, their place in the value chain diminished. 

Are we seeing the “telco” in a new light with the advent of Covid 19 forcing us to recognise the importance of reliable network connectivity and associated digital services? This is almost paradoxical as the main service that most telcos provide – data connectivity via fixed or mobile broadband had been seen by many as a commodity. However, that is starting to change as customers realise that connectivity and the diverse services it allows are really is essential – just ask someone living in a rural area with poor coverage – or someone considering living there.

As stand-alone 5G gets rolled out and telcos can build quality of service into their specific 5G offers, then the value that the telco delivers will increase further – not just to customers but also to their partners as well. This will further increase the value of the telco brand.

Leadership of telco service providers can legitimately ask themselves: what do they need to do to ensure they continue to grow their value and enhance their place in the communications value chain?  How can they reliably diversify beyond decent population coverage? They will need to consider key strategies like building cloud native networks, improved network reliability through automation, edge computing, flexibility of service creation enabled through micro services and partnerships. The good news is that as they transition to 5G technology these are all within reach. It’s just up to them to decide how they go about adopting these technologies to enhance their value further.

 

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