Why MTN is the most valuable brand in South Africa

Brand valuation and strategy consultancy Brand Finance recently released a ranking of the most valuable brands in South Africa in 2018.

As defined by the report, brand value is equal to a net economic benefit that a brand owner would achieve by licensing the brand. Brand strength is used to determine what proportion of a business’ revenue is contributed by the brand.

In calculating this value, Brand Finance uses the royalty relief approach, which it says “involves estimating the likely future revenues that are attributable to a brand by calculating a royalty rate that would be charged for its use, to arrive at a ‘brand value’ as a net economic benefit that a brand owner would achieve by licensing the brand in the open market.”

In a recent presentation at law firm ENS Africa, Brand Finance explained that MTN was named as South Africa’s most valuable brand –  having grown in value by 8% over the past year to R44.2 billion.

The reason for the growth is that MTN’s customers are spending more on data services, a trend that is occurring throughout the world, it said.

MTN’s data revenue grew 34.2%, whereas its overall revenue grew 7.2%. This growth didn’t come easy as MTN has invested heavily in improving data quality and capacity.

MTN is also very much a global company, with a presence in 22 countries in Africa and the Middle East, it said.

“MTN is South Africa’s most valuable brand because of their industry leadership. They are increasingly recognised throughout Africa by their customers as providing high-quality service, because their brand image is deeply rooted on more than just marketing campaigns,” said Brand Finance CEO David Haig.

Other interesting findings include:

  • First National Bank’s brand value rose 17% making it South Africa’s third most valuable brand;
  • Outsurance and Cell C also achieved impressive growth;
  • Capitec Bank has performed very well and is now South Africa’s strongest brand ( brand strength is different from brand value, but is seen as a valuable driver of brand value).

The top 10 most valuable brands in South Africa were:

# Brand 2018 value 2017 value Change
1 MTN R44.2 billion R40.8 billion +8.0%
2 Vodacom R27.5 billion R24.3 billion +13.0%
3 First National Bank R19.4 billion R15.9 billion +22.0%
4 Absa R18.9 billion R18.3 billion +3.0%
5 Standard Bank R18.5 billion R20.8 billion -11.0%
6 Woolworths SA R18.1 billion R18.4 billion -1.0%
7 Sasol R15.7 billion R19.0 billion -17.0%
8 Investec R14.9 billion R13.8 billion +8.0%
9 Nedbank R14.8 billion R12.8 billion +16.0%
10 Multichoice R14.3 billion R13.5 billion +6.0%

The value of services

One thing that is striking is the total dominance of what are sometimes referred to as ‘service trade marks’, and what this says about the South African economy, said Gaelyn Scott, head of IP at ENS Africa.

She pointed out that the first ‘goods trade mark’ on the list is Castle, which comes in at number 11.

“The strength, or otherwise, of a country’s economy can be measured by its brands not only do they generate money, they pay taxes, create jobs and act as ambassadors.”

“However the report also shows how precarious brands can be,” said Scott.

“Brands and reputational issues have never been more important as has been seen so clearly in South Africa over the last year. Whether it be the nefarious activities of the Gupta family and their acolytes which impacted such companies as Bell Pottinger, Eskom, McKinsey and KPMG, or the problems experienced by the likes of Steinhoff,” she said.

“South Africa under the new leadership of President Cyril Ramaphosa now has the opportunity to leave behind the last decade of little or no growth and move ahead. The world will not wait for South Africa. One way to turbo-charge the economy, as demonstrated by China, is by developing and investing in home grown brands and also either acquiring or buying into international brands.”

Read: These are the most valuable banks in South Africa in 2018

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Why MTN is the most valuable brand in South Africa