Deutsche Telekom has once again been ranked as Europe’s most valuable telco brand.
Brand Finance’s annual list, exclusively revealed today by European Communications, shows that the Germany-based operator has increased its brand value by 6.7 percent over the past 12 months to $33.2 billion.
Brand Finance Associate Director Savio D’Souza said: “Deutsche Telecom, widely known as T, managed to overthrow Vodafone back in 2014 as Europe's most valuable brand, mainly as a result of its successful rebranding strategy in almost all of its countries of operation.
“In the last year it has been highly profitable, with net profit up to over €800 million in Q3 2015.
“It has reinvested this in projects such as broadband network extension, laying the foundations for future brand value growth.”
DT came in fourth place behind Verizon, AT&T and China Mobile in the global rankings.
According to D’Souza, 4G networks remain a key strength of Europe’s telecom brands in the short term.
But he said: “As 4G coverage reaches its optimal levels within Europe we expect to see a drop in capital intensity of the regional carriers, which in turn would allow companies to reallocate available funds to increased marketing expenditure and promotional campaigns.”
On the flip slide, the exposure of some European telcos to Latin American markets has proved a major weakness.
Nowhere was this more evident that at Telefónica-owned Movistar, which saw its brand value plummet by 23 percent.
The Spain-based operator fell to seventh place in Europe with a brand value of $8 billion.
“The Movistar brand lost value mainly as a result of lower reported revenue from the South American region,” said D’Souza.
“Forecasted sales growth is also lower this year, while at the same time external factors such as higher risk in Latin America and lower EUR/USD exchange continue to put downward pressure on the brand value.
“Brand strength, however, remained largely intact with just a marginal drop in some consumer brand equity and financial performance related scores.”
Newer entrants are benefiting from such travails to rise up the ranking.
Sky, for example, saw its brand value increase by 27 percent to $11.1 billion.
The UK-based company, which is set to launch a mobile service this year, is now the fifth most valuable telco brand in Europe.
“Sky added over one million customers in Europe last year, which it ascribes to investment in content and internet-enabled services,” said D’Souza.
“It is rolling out the SkyQ box as part of this approach, in order to counter the growing threat from BT.”
With M&A activity rife across the continent, D’Souza said big changes to brand value are to be expected over the next 12 months.
“Merged entities can benefit from greater brand presence, a stronger financial position and a broader product offering,” he said.
“As a result, established market participants may face margin pressure as prices for consumers drop and it may become more difficult to attract and retain customers.
He added: “Value chain disruption through new technology is also reshaping the telecoms sector.
“Technological change is opening up the market to more agile and innovative competitors.”