MTN and Vodacom have claimed the top two positions in the Brand Finance South Africa 50 2019 as the most valuable and strongest South African brands.
The companies claimed first and second place respectively in the report, which was released yesterday by Brand Finance, an independent branded business valuation and strategy consultancy headquartered in London.
The local telcos took the two top places due to their high financial value. The report names 50 brands that were rated in their different sectors, with the two operators taking the highest overall ranking.
The report is compiled annually and aims to look at “bridging the gap between marketing and finance”. The survey was first launched in 1996.
The methodology estimates the likely future revenue attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’, understood as a net economic benefit that a licensor would achieve by licensing the brand in the open market.
Brand Finance CEO David Haigh says when brands perform impressively, it leads to job creation.
“The impressive performance of South Africa’s most valuable brands poses a potential source of growth for the economy that, in turn, could lead to increased job creation and funds flowing to the fiscus,” notes Haigh.
According to the report, MTN, the biggest mobile operator on the continent with a brand value up 14% to R50.3 billion, has increased its subscriber level steadily over the last year and boosted its earnings.
Meanwhile, the report notes Vodacom’s brand value increased by 21% to R33.3 billion, despite the brand recording revenue losses in its South African business.
However, the strong results from Vodacom’s international operations and the benefits reaped from the 2017 Safaricom acquisition provided solid growth for the brand over the last year.
The two operators’ continuous control of market share across the country has left smaller brands struggling to compete, resulting in data wars. These brands include Telkom (up 15% to R5.9 billion) and Cell C (up 5% to R3.9 billion).
The survey notes that although these two brands have recorded modest growth compared with other brands across the ranking, they have achieved good results against the backdrop of falling telco brand values around the world, as they contend with the increased commoditisation of core carrier services and the need to implement new technologies requiring significant capital investment, such as 5G mobile telephony.
Brand Finance Africa MD Jeremy Sampson says South African brands are growing despite the weak economy.
“The top South African brands are consistently recording high brand value growth rates, in stark contrast to the nation’s sick economy, which is currently falling short of other countries’ growth across the continent.”
Following MTN and Vodacom in the top 10 are First National Bank, Absa, Standard Bank, Sasol, MultiChoice, Woolworths, Castle and Nedbank.
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