Report from Analyst Brand Finance says those wiithout strong branding will be overtaken.
Africa’s mobile operators must develop into strong brands before global competitors fill the vacuum, warns the author of a report into African brand financing.
Analyst Brand Finance has ranked the top 150 brands of Africa by brand value and brand strength. Jeremy Sampson, MD of Brand Finance Africa, said the continent needs brands, not just because they generate income, create jobs and act as ambassadors for their country of origin. At the other end of the spectrum from a strong brand is a ‘commodity’ where everything is based on the cheapest price and African telcos must avoid that race to the bottom, he warned.
The analyst defines brand value as the “net economic benefit that a brand owner would achieve by licensing the brand in the open market”. Brand Finance Africa said the value of the continent’s top 150 brands dropped $5.5 billion in 2021 thanks to the Covid pandemic and the knock-on effects of lockdown and uncertainty.
Telecoms is second biggest
Telecoms is Africa’s second most valuable industry, according to the report, with the 26 brands in its Top 150 ranking accounting for one fifth (21 per cent) of the total brand value in the ranking. However, the telecoms the industry still lost 14 per cent of cumulative brand value year-on-year, down to $8.5 billion.
MTN Group has been named the most valuable African brand in the Brand Finance Africa 150 rankings. It’s the second year in a row the South Africa-based pan-african telecom operator has headed the rankings, which valued the group at $2.7 billion.
The report notes a ‘turbulent year’ for MTN whose brand was damaged by scandals such as the hacking of its money mobile services in Uganda and the allegation of price discrimination practices. Its rival and price fixing ally, second-ranked Vodacom, found its own brand value fall 16 per cent to $1.7 billion.
The brand analyst notes that MTN scaled down its operations in the Middle East and focused on Africa. Positives include the recent appointment of Ralph Mupita as CEO and successful launch of its 5G network across major South African cities. According to the report MTN’s 5G installations will capture some of its lost brand value.
Maroc Telecom performing well
In thirteenth place spot is Morocco’s Maroc Telecom with a brand value of $761 million after attracting 10 per cent more broadband users.
Meanwhile Safaricom retains Kenya’s most valuable brand value at $716 million despite falling three places to 15th and a 26 per cent year-on-year drop in brand value. The telecoms company expanded its revenue streams by acquiring the mobile money platform M-Pesa in a joint venture with Vodacom.
However, brand value was lost when M-Pesa did not perform as anticipated and Safaricom suffered a 6 per cent decline in annual profit, even as total M-Pesa transactions grew by 33 per cent. The $9 transaction fees, scrapped on the orders of Kenya’s Central Bank during the Covid relief efforts, could revive Safaricom if restored in future, the report says.
Why brands matter
Brand Finance (BF) blames the overall loss in the telecom’s sector’s value on ‘OTT messaging apps like WhatsApp’ which are impacting voice and SMS revenue and challenger brands that offer comparable data services at cut-price rates.
In a summary BF’s CEO David Haigh explained why Africa needs mobile operators with strong brand recognition: “Brands create value and will help lead the economy out of the recession caused by COVID-19. African countries need to grow their own brands to build their domestic economy, otherwise global brands will fill the vacuum as economies start to pick up.”