The case considers Telekom Malaysia’s 2007 decision to demerge its mobile and fixed telecommunications services, against the background of TM’s broader strategy aimed at optimizing the group’s operations and improving shareholder value. This process would see the group restructure its balance sheet and offload some of its non-core assets such as office buildings. The case provides a basic overview of Islamic finance instruments such as sukuk, and illustrates their application in infrastructure financing. It describes the rationale behind TM’s choice of an “ijarah sukuk” transaction structure as a type of Shariah-compliant asset-backed securitization, and lists the benefits offered by this particular structure in the context of value creation.
Learning Objective
The case provides a good opportunity to discuss Islamic finance in the context of an interesting transaction (TM Menara ABS), reflect on what constitutes value creation and address the value proposition of Islamic finance.
Keywords
Islamic Finance, Islamic Banking, Value Creation, Sukuk
Settings
South-Eastern Asia, Malaysia
2006 – 2007
Available Languages
English
Related material
Teaching note
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