The Covid-19 pan­demic has dealt a se­ri­ous blow to lo­cal and in­ter­na­tional brand val­ues. But tele­coms op­er­a­tor MTN is hold­ing on to its top spot in SA, de­spite be­ing squeezed on all sides and hit­ting head­lines for the wrong rea­sons

Financial Mail - - ADFOCUS BRAND DAMAGE - Jeremy Maggs

ý For the first time, the dev­as­ta­tion the Covid19 pan­demic is wreak­ing on brands is laid bare in the lat­est Brand Fi­nance lo­cal rank­ings. The global agency es­ti­mates SA’S top 50 lead­ing brands stand to lose more than R65bn in their value — a drop of 15%.

And look­ing be­yond SA, the value of the 500 most valu­able brands in the world, ranked in the Brand Fi­nance Global 500 2020 league table, could fall by an es­ti­mated R15-tril­lion as a re­sult of the out­break. Brand Fi­nance has as­sessed the im­pact of Covid-19 based on the ef­fect of the out­break on en­ter­prise value — a mea­sure of a com­pany’s to­tal value, in­clud­ing mar­ket cap­i­tal­i­sa­tion and short- and long-term debt as well as any cash on the com­pany’s balance sheet — com­pared to what it was on Jan­uary 1 2020.

Based on this im­pact on en­ter­prise value, Brand Fi­nance es­ti­mated the likely im­pact on brand value for each sec­tor. The in­dus­tries have been clas­si­fied into three cat­e­gories — lim­ited im­pact (min­i­mal brand value loss or po­ten­tial brand value growth), mod­er­ate im­pact (up to 10% brand value loss) and heavy im­pact (up to 20% value loss) — based on the level of value loss ob­served for each sec­tor in the first quar­ter of 2020.

Notes Brand Fi­nance SA MD Jeremy Samp­son: “Now, more than ever, the econ­omy will rely on the strength of home-grown brands to sup­port the na­tion’s ef­forts on home soil and abroad to try to pull SA out of the slump that has en­gulfed the na­tion for the past decade.”

The agency be­lieves that post-covid the coun­try and the con­ti­nent still have po­ten­tial and op­por­tu­ni­ties for brands. How­ever, it says the next six months will be cru­cial. With so much un­cer­tainty in the world, and in par­tic­u­lar con­cerns about po­ten­tial dam­age to both the pop­u­la­tions and economies of emerg­ing coun­tries, Africa will be in for a rough ride be­fore things im­prove.

Against that back­drop tele­coms gi­ant MTN, which has just started rolling out its 5G net­work, has re­tained the ti­tle of SA’S most valu­able brand, de­spite record­ing a 2% brand value loss to R49.4bn. Brand Fi­nance says: “De­spite be­ing touted as one of SA’S great­est cor­po­rate suc­cess sto­ries, the brand has been hit­ting the global head­lines re­cently and has been placed un­der in­creased scru­tiny fol­low­ing al­le­ga­tions that it paid bribes to mil­i­tant Is­lamist groups in Afghanista­n. This is not the first time the brand has come un­der the mi­cro­scope — it was also fined by the Nige­rian gov­ern­ment in 2015 — and MTN will, once again, rely on its strong brand and its far-reach­ing mar­ket share to main­tain its po­si­tion as SA’S most valu­able brand.”

The re­port notes that as with all big tele­coms com­pa­nies glob­ally, MTN is be­ing squeezed from all sides as mes­sag­ing apps such as What­sapp hit voice and SMS rev­enue and chal­lenger brands of­fer com­pa­ra­ble data ser­vices at be­low-mar­ket rates, lead­ing to fierce price com­pe­ti­tion and de­creas­ing mar­gins. Covid-19, it says, may be an op­por­tu­nity for tele­coms brands to re­verse their for­tunes.

Record­ing a 29% brand value in­crease to R2.4bn, and si­mul­ta­ne­ously jump­ing five spots, Life Health­care is the fastest-grow­ing brand in the rank­ing. Brand Fi­nance says the group has suc­cess­fully turned the tide on its for­tunes, af­ter a tur­bu­lent cou­ple of years ne­go­ti­at­ing the fall­out from the Com­pe­ti­tion Com­mis­sion’s Health Mar­ket In­quiry re­port, where the sec­tor was placed un­der scru­tiny for ris­ing con­sumer costs and lack of trans­parency, both of which dam­aged brand val­ues. On the front­line of the global pan­demic in SA, Life Health­care and fel­low hospital group brands Medi­clinic (down 15% to R4.9bn) and Net­care (down 50% to R1.6bn) were ex­pected to be among the few brands to ben­e­fit as a re­sult of in­creased de­mand. This has not been the case, how­ever, with all three brands show­ing sig­nif­i­cant loss in rev­enue as nonessen­tial elec­tive pro­ce­dures have been can­celled.

In ad­di­tion to mea­sur­ing over­all brand value, Brand Fi­nance also eval­u­ates the rel­a­tive strength of brands, based on fac­tors such as mar­ket­ing in­vest­ment, cus­tomer fa­mil­iar­ity, staff sat­is­fac­tion and cor­po­rate rep­u­ta­tion.

Based on th­ese cri­te­ria, Vo­da­com (down 9% to R30.3bn) is the strong­est brand in SA, with a brand strength in­dex score of 89.5 out of 100.

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