Axiata plans airtime sukuk (6888)

Malaysia's Axiata Group Bhd joins a growing number of companies using
mobile-phone airtime to back Islamic transactions as Asian subscribers
are forecast to dominate the global market in three years.

The
nation's biggest telecommunications operator, with businesses in India,
Indonesia and Sri Lanka, set up its first multi-currency sukuk program
worth US$1.5 billion backed by telephone minutes, according to a July
19 stock exchange filing. Emirates Telecommunications Corp, the
sheikdom's largest phone company, established a US$1 billion
Shariah-compliant debt plan supported by similar assets in November
2010.

Cellphone owners in Asia will account for about 65 percent
of 7 billion worldwide by 2015, according to a February report from
Tokyo-based research company ROA Holdings Inc. More Islamic bond
issuers are using airtime as an asset class due to the limited pool of
commodities such as land and property, Mohamad Akram Laldin, who sits
on the Malaysian central bank's Shariah Advisory Council, said in a
July 30 interview.

"Airtime isn't physically tangible but its
value, amount and quantity can be calculated and fixed, therefore it
can be used as a Shariah-compliant asset," Abas A. Jalil, chief
executive officer of Amanah Capital Group Ltd, a consultancy company in
Kuala Lumpur, said in a July 30 interview. "This is what we call
innovation in Islamic finance, whereby more commercially viable
products will be introduced in the future."

Deferred Payment System

Phone
minutes are also used to underpin Islamic loans in Malaysia. IDOTTV Sdn
Bhd, which helps arrange funding backed by airtime, expects sales of
airtime vouchers to expand to RM150 million per day by the end of the
year from RM45 million now, based on talks with banks, Chief Operating
Officer El Hadj Azahari Pawan Teh said in an interview in Kuala Lumpur
yesterday.

Shariah-compliant loans to individuals grew 27
percent to RM28.2 billion in 2011 and reached RM29.2 billion this year
as of June, according to central bank data.

IDOTTV uses
mobile-phone minutes to back the loans in the same way crude palm oil
facilitates trades based on the Islamic principle of Tawarruq, IDOTTV's
Azahari said. In Tawarruq personal financing, a client buys an item on
credit from a bank on a deferred-payment basis and then sells it for
cash to a third party.

"Demand for airtime is expected to rise
further as Islamic banks look to expand their deposits and credit card
business using Tawarruq," he said. -- Bloomberg