The finance deal for the Denis O'Brien-owned business is the latest in a string of landmark Islamic finance over the past year, with debut sovereign Islamic bonds (sukuk) from Britain, Luxembourg and South Africa helping test the funding format across a growing number of jurisdictions.
Islamic financial products are structured to comply with religious rules including a ban on the charging of interest. They are increasingly popular with borrowers because they can tap into a huge Islamic investor base.
Sharia compliant deals can require multiple transfers of title of the underlying asset, and so can present regulatory challenges for new jurisdictions in areas such as tax.
The financing for Digicel's Myanmar Tower Company (MTC) will mark the first Islamic cross-border deal in the Asian country, law firm Clifford Chance said. "This transaction is also a milestone as very few cross-border financings in relation to Myanmar have been completed in recent years," said the law firm, which advised Doha-based investment firm QInvest on the deal. Due to regulatory and timing issues, MTC's parent company in Singapore is the initial borrower of the funds, with the terms of the deal allowing the Myanmar entity to replace the parent company when it is able to do so.
In 2013, MTC signed an agreement to build and lease telecommunication towers in Myanmar for Qatar's Ooredoo, which in August became the first foreign firm to begin operations in one of the world's last mobile frontiers. Norway's Telenor Group holds the only other international operating licence in Myanmar. As of March, Ooredoo had sold over 3.3m pre-paid SIM cards in Myanmar and hopes to expand coverage to reach 97pc of the population within five years.
(Business Newsletter / 07 May 2015)
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com