Why MTN Is so Valuable to South Africa

MTN important to South Africa

Following an announcement of the top 50 brands in South Africa, MTN was named number 1.  Having won the prestigious title for a third year in a row, the telecom giant must be settling into the top of the list quite nicely.

It would seem that telecommunications companies were the biggest earners of 2015, with Vodacom coming in second on the list.  However, with a value of R20 billion, Vodacom is still a long way from catching its rival.  As it happens, MTN took the top spot quite comfortably with a value of R54 billion.

Why MTN is worth so Much More

There is no easy answer to why MTN is doing so much better than its competitors.  Its prices are a little higher, meaning that it wouldn’t attract customers simply because of cheap prices.  In fact, research conducted last year indicated that Vodacom had more subscribers.  But, the formula used to calculate net worth wasn’t based on such basic principles.

Thebe Ikalafeng, who is the founder of Brand Africa (the brand valuation company responsible for the Top 50 List), explained that the process for calculating net value was based on ‘royalty relief methodology’.  The brands were valuated through an estimate of lease or rent amount.  To this, an applicable royalty rate was applied and then the future income estimate was discounted.  This delivered a total which could reasonably be considered to represent the brand’s net value at present.

Why the Value of MTN is Important

When asked about the relevance of creating a list of the most valuable brands in South Africa, Ikalafeng said that these brands are ‘who we are’ and that they are important to ‘how we express ourselves’.  Whether this applies to his company or the country itself is not certain, but it is significant either way.

With the South African economy having come under close scrutiny in recent months, it is comforting to know that the most valuable company in the country is capable of such a value.  Moreover, MTN is a multinational operating throughout most of Africa and parts of the Middle East, meaning that it has the power to bring in revenue from other countries which will ultimately help the rand.  After all, intra-African trade is important to our country’s GDP.

But, most importantly, Ikalafeng pointed out that these large brands have the power ‘to create jobs, which keep us gainfully employed.’  Gainful employment is something that is integral to the success of any country because it creates hope.  In essence, this is the biggest takeaway of the compilation of such a list.  A list of brands with values of roughly R 150 trillion collectively is not meant to be formidable, it is meant to fill South Africans with hope.

Image credit: http://mybroadband.co.za/news/cellular/149743-cheapest-sa-mobile-network-for-using-while-on-holiday.html