India’s biggest mobile phone company by customers Bharti Airtel Ltd has found a place among the world’s 25 most valuable telecom brands, ranked by the UK-based brand valuation firm Brand Finance Plc. Bharti Airtel ranked 25th in the recently released list, with a brand value of $2.48 billion (Rs97,780 million then) at the end of 2007. This is the first time an Indian telecom brand broke into the list.
Brand Finance ranked Britain’s Vodafone Group Plc. the world’s most valuable telecom brand, with a value of $26.59 billion, followed by AT&T Inc. at $24.6 billion and Verizon Communications Inc. at $24.38 billion. Bharti Airtel had an AA+ (very strong) rating for brand strength.
“The key to our success has been our constant focus on service and innovation—be it our unique business model of outsourcing IT (information technology) and networks or revolutionary products such as Hello Tunes and Lifetime Prepaid,” said Manoj Kohli, chief executive officer and joint managing director of Bharti Airtel. “With established presence across all three screens— mobile, PC and TV—Airtel is in the process of transforming itself from a telecom firm to a lifestyle enabler.”
Significantly, none of the other Indian telecom brands—such as Bharat Sanchar Nigam Ltd, or BSNL, Reliance Communications Ltd and Idea Cellular Ltd—has found a place on this list, even though most would feature in a listing of top 25 telecom firms by the number of subscribers.
An earlier Brand Finance report had estimated the brand value of Idea Cellular at $527 million, with brand strength of A+ (strong), and that of Reliance Communications at $1.89 billion, with similar brand strength, based on values ending 2007.
Unni Krishnan, managing director of Brand Finance India, reckons Bharti Airtel would have gained by 10-12% in brand value since December.
The Brand Finance valuation methodology is known as “royalty relief” and is based on the notion that a brand holding company owns the brand and licenses it to an operating company. The notional price paid by the operating company to the brand company is expressed as a royalty rate. The net present value of all forecast royalties represents the value of the brand to the business.
While Indian telecom brands may be advancing, they don’t stack up against the global brigade that is going from strength to strength.
“Vodafone’s brand value continues to strengthen as its enterprise value has risen from $158 billion to $185 billion due largely to investors favouring its developing world expansion strategy,” Brand Finance said.
AT&T is narrowing the gap with Vodafone, according to the brand valuation firm. AT&T’s brand value has increased from $10 billion in 2007 to $24.6 billion, and if it expands more aggressively beyond the US, Vodafone will have a run for its money.