Telecoms top SA brands

MTN and Vodacom are at number one and two on SA's Top 50 Corporate Brands list.

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Telecoms operators are still ruling South Africa's corporate brands space, with MTN and Vodacom coming out on top, according to a study by Brand SA and Brand Finance Africa.

The third annual study found the top 50 corporate brands in the country are valued at approximately R1.5 trillion, with telecoms being the most valuable sector, followed by banks and retail.

MTN has retained the top spot three years in a row, with second and third place jumping between rival Vodacom and oil and gas giant Sasol.

Brand Finance Africa MD Ollie Schmitz says the "seemingly unstoppable MTN brand" lost a little strength in the 2015 survey, leaving it pretty much on par with rival Vodacom.

"Perhaps due to its Word Cup sponsorship fading and Vodacom's consistent out-spending of its rival on advertising, the playing field is starting to level. That said, both companies' advertising spend has reduced by almost a half over recent years. A measure of the tough times in the telecoms sector."

Despite difficult conditions for telcos, Africa Analysis MD Dobek Pater says MTN and Vodacom's brand strength remains strong due to the "indispensability of mobile communications".

"Practically everyone (bar infants) has a mobile phone and is normally associated with one of the large cellcos. These brands are readily recognisable and top of mind. [MTN and Vodacom] also generate considerable revenues in the SA market, which is a stronger contributor to the valuation."

ICT veteran Adrian Schofield says he doesn't believe strong telco brands say anything unique about South Africa.

"The telcos, especially the mobile ones, spend sizeable marketing budgets on branding pretty much worldwide. Drive into any city from the airport and you will be in no doubt as to the identity of the service providers, with branding visible on everything from massive billboards to spaza shops," says Schofield.

While MTN and Vodacom's brands continue to dominate the list, rival Telkom ranked 23rd and Cell C snuck into the top 50 at number 48. Schofield says this is a pretty fair outcome when looking at the South African market.

"In market share terms, you could debate whether it is accurate but it is a fair indication of the relative strength of the four brands."

Pater says the telecoms market is very broad, and company perception varies depending which market segment and which products and services are being considered.

"MTN and Vodacom are by far the largest operators by revenue, which has a strong impact on brand valuation. Their services are also widely used in the consumer market.

"Theoretically, Vodacom should be number one followed by MTN, if we only looked at the SA operations. The fact that MTN is in the number one position is because these companies are being considered at group level. It may also be the market's perception of its value (to users) given its position as the largest pan-African operator and MTN's greater ability to market itself," says Pater.

Telkom dropped from 19th place last year to 23rd place in 2015, while Cell C fell one place to 48.

Pater says both brands saw a decline in the rankings despite showing an improvement in terms of brand strength and value, albeit marginally.

"This just means that other brands performed better than Telkom and Cell C, which resulted in the relative decline in the ranking. MTN, on the other hand, lost 4% in its brand value but still remains at the top of the rankings due to the sheer size of its value."

Schofield says Telkom's dip is not that significant but could be the result of less focus on the broad consumer market in its advertising campaigns.

Overall brand value for the top 50 increased by 9%, growing from R340 billion in 2014 to R372 billion in 2015, according to Schmitz.

"Brands have therefore become more than just a logo or slogan. They are now seen as corporate assets which are amongst the most valuable that an organisation can have," says Brand Finance Africa chairperson, Thebe Ikalafeng.

He says that by extension, national corporate brands also contribute to a nation's assets in terms of the value they add to the country, in terms of GDP and reputational impact.

Brand South Africa CEO Kingsley Makhubela says developing, strengthening and maintaining a nation's brand is a multifaceted task and there are a range of factors which can assist in positioning the nation positively.

"These factors, if based on a solid foundation, can help the nation brand weather the storms posed by the global political and economic environment. One of these factors are national corporate entities."

Makhubela says the excellence of corporate brands contributes immensely to the strength and positive reputation of the South African nation brand. This can also aid foreign direct investment in South Africa.

"[Telecoms brand] presence does show potential investors that there is a connected community, which is probably generating return on investment for the telco shareholders and offers a potential market for suppliers of other products and services," says Schofield.

Schofield says leveraging on brand strength is important for telcos, which convert brand loyalty and brand awareness into sales.

Pater adds that telecoms operators do this through extensive marketing to remain at top of mind as well as "reliance on good image associated with quality services, or at least better quality services than the competitors".

"Marketing includes event sponsorships and in particular sport. Going forward, it will be more difficult to maintain their strengths as their revenues come under pressure, but I expect they will remain strong brands," says Pater.

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