China Mobile has the most valuable mobile operator brand in the industry with a worth of $30.79bn, according to new research shortly to be published in telecoms.com's sister publication Mobile Communications International.

The research - which ranked the top 100 cellco brands in the world - was carried out by brand valuation specialist Intangible Business. Vodafone placed second, with a brand value of $22.13bn, while US carrier Verizon ranked third with $20.38bn. But given that Vodafone owns three per cent of China Mobile, and 45 per cent of Verizon wireless, the UK firm can lay claim to the most valuable proportionate brand portfolio.

This is the first time such research has been carried out for the mobile operator community and, while the top ten places are dominated by familiar US and European names, as well as dominant Chinese and Japanese players, the presence of a number of emerging market specialists inside the top 30 reflects how the global market is shifting in terms of regional power. Firms that specialise in Indian, MEA and former CIS markets all place strongly in the rankings.  

Notably, in the top ten brands punching above their weight developing market players - as well as Middle Eastern-based carriers - occupy all the positions.

"Brand valuation is unique as it considers a combination of elements that contribute to value," said Will Grobel, marketing director at Intangible Business. "It is therefore a more robust way of looking at the health of a brand and the business that owns it than looking at single measures separately." Below, Grobel explains the methodology used to compile the ranking, which drew heavily on information from Informa Telecoms & Media's World Cellular Information Service.

"Brand values are a reflection of a brand's ability to generate future income. So this is a forward looking study that uses historic performance and future trends to predict future activity. The actual brand valuation calculation is relatively straight forward. It attempts to derive the amount the brand owner would be willing to pay for its brand if it did not already own it. This approach is called the relief from royalty methodology as it calculates how much the brand owner is relieved from paying by virtue of owning the brand. The more complicated parts are the components that contribute to the calculation. These three stages illustrate the process, simply:

1. Forecast salesThree years of historical sales data was gathered for 500 of the world's biggest mobile operator brands. The top 100 brands have been given indefinite lives as they are all market leaders, with heritage and financially robust owners. The compound annual growth rate (CAGR) is adjusted to reflect the brand's long term ability for growth. This reflects more accurately a brand's growth prospects based on its current and historical performance.

2. Royalty rateTo determine the strength of the brands, each brand was scored on nine measures of brand strength, provided from qualitative panel data. This included share of market, growth, price positioning, market scope, preference, awareness, relevance, heritage and perception.

Each brand was also measured on three years of hard data including turnover, subscriptions, churn, market share, growth, penetration, average revenue per user (ARPU), and profitability. The average of these two total scores (panel brand score and hard brand score) was then positioned between a royalty rate range. This determines a unique royalty rate for each brand.

The royalty rate appears to be a simple percentage but in fact this hides the depth of understanding required to determine a rate that reflects accurately the profit/cash flow generated by the brand alone - separate from other elements of product delivery.

3. Discount rate: Future sales are then multiplied by the royalty rate and reduced at the relevant tax rate. They are then multiplied by a discount rate to calculate the net present value of those future cash flows. The discount rate reflects the time value and risk attached to those cash flows and for the purpose of this exercise has been left at a flat 9% as these are relatively low-risk, established brands.

Testing: Results are tested and verified by sense-checks, such as to comparable commercial transactions, and referenced to proprietary information on the value of leading brands, which all share similar characteristics of value cash flow generation. These valuations are based on an analysis of publicly available information and do not necessary reflect true past or future performance."