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Case Study

TM Menara ABS: Value creation and Islamic finance

By Salvatore Cantale and Martin Králik

14 pages

June 2013

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Reference: IMD-1-0340

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, Finance

Settings

South-Eastern Asia, Malaysia
2006 – 2007

Type

Field Research

Available Languages

English

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Teaching note

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