The value of telecom operators' brands is rising, and with a raft of acquisitions occurring in the region rebranding can be a vital part of the process of expanding into new territories.

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By  George Bevir Published  February 8, 2009

The value of telecom operators' brands is rising, and with a raft of acquisitions occurring in the region rebranding can be a vital part of the process of expanding into new territories.

Little emphasis was placed on brands and image when the telecoms industry was dominated by state-owned operators in the 1970s and 1980s; operators simply combined the name of the country in which they were present with the suffix "telecom".

Such names were uninspiring and lacked originality, but they were all that was required and it was only when the mobile phone arrived and telecommunications became a consumer issue and not just a utility to be bundled with the supply of electricity, gas and water that distinct brands emerged.

Now, with multiple licenses and saturated markets a clear brand identity is a vital part of an operator's corporate strategy.

"From being one of the least branded sectors, telecoms has become arguably the most branded, says David Haigh of Brand Finance, a brand valuation consultancy.

"This is reflected in the value of intangible assets in mobile phone firms, particularly in the value of their brands."

According to Brand Finance's Global Intangible Tracker database, intangible assets represent 67% of enterprise value in the telecoms area. "Much of this value lies in spectrum rights and technology, but a large amount sits in brands and other marketing intangibles," Haigh says.

Going global

In spite of the economic crisis that has gripped markets around the world, telecoms operators continue to drive into new territories in the Middle East and Africa. For those that win a new license the task is to establish their brand, and for those that acquire an existing operator the case for unifying a host of disparate brands under one brand is strong.

For UK network Vodafone, which has operations in 27 countries including new licenses in Ghana and Qatar, the decision to rebrand acquisitions is part of its overall strategy of expanding its global presence.

"We always acquire to rebrand," says David Wheldon, Vodafone's global brand director. "That is our intent because we are building the Vodafone brand across the world."

The extension of Vodafone's brand has been a gradual process which has taken place as new licenses have been awarded or companies acquired, but the scale of the task of rolling out a pre-existing brand can still be staggering. When Vodafone migrated its brand to India, a massive 448,000 items of signage on real estate and outdoor signs all over the country had to be changed.

In September 2007, MTC took the decision to rebrand its group and four of its networks in Kuwait, Bahrain, Jordan and Sudan under the name ‘Zain', with other operators in the group adopting the brand later in the year. Unifying the MTC, Celtel, Fastlink and Mobitel under one common brand was essential for Zain to launch its ‘One Network' proposition.

"For any company wanting to go global, as MTC has set out to do...a strong, distinctive brand name was essential," says Zain's chief communications officer Ibrahim Adel.

Adel says the process of creating the brand identity took a year and a half. "We started and re-started because we wanted to have an optimal brand in the end. We engaged world-leading consulting firms as partners, we engaged a lot of our people and had a great buy-in from our stakeholders. MTC management, marketing and communication teams considered some 400 names before eventually narrowing down the choice to just three, with the final choice a name put forward by one of MTC's own staff."

Implementing the new brand required a massive amount of work, and that "everything labelled MTC had to be replaced by Zain, from Sim cards to brochures, carpets to store fronts, and business cards to stationery".

Operators are cagey when it comes to discussing the cost of rebranding and instead of dwelling on the initial outlay they prefer to highlight the savings that can be generated through consolidation, which only get better with time, Wheldon says.

"People learn from each other and transfer best practice around and then you get into the synergies and the savings. And the more our world gets joined up the more we can save because we have one brand. If we told you what the cost is - if you looked at a spreadsheet over time - it becomes cheaper to run one brand than 26," he says.

Adel adds that the financial benefits are not just confined to savings made by the company. He says that a unified approach has also contributed towards creating a strong brand equity which in turn, he says, helps to command higher share prices, resulting in improved returns for both shareholders and employees alike.

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