Islamic Finance news calls Mobily deal 'most innovative'

Receiving the award in the United Arab Emirates on behalf of Mobily's CEO was Humoud Al Ghobaini, the company's Senior Manager for Corporate Communications.

What set Mobily apart from the rest, according to the magazine, was the way that the Islamic finance rules of agency were applied, and how Mobily was able to demonstrate the "fungibility" of airtime, the minutes of usage consumed by mobile phone customers, essentially an intangible asset.

"In the end, it was the demonstration of the fungibility of air time, an intangible asset, and its use as the underlying asset for a proper Islamic sales transaction applying the rules of agency that won in this category," the magazine said.

Furthermore, the magazine said it believed that the innovation presented by Mobily in demonstrating the fungibility of an intangible asset like air time, set a precedent and paved the way for funding other high-technology and communications deals in the future.

Fungibility itself, as an economic concept, is different from liquidity. Whereas liquidity means that a good can be easily exchanged for money or another different good, a good is fungible if one unit of the good is substantially equivalent to another unit of the same good of the same quality at the same time and place. Examples of highly fungible commodities are petrol, electricity, precious metals, many currencies, and judging by the Mobily deal, phone air time.

Mobily raised SAR10.781bn ($2.875bn) in an Islamic financing deal syndicated by ABN AMRO Bank, Banque Saudi Fransi, Bank Calyon, National Bank of Abu Dhabi, The National Commercial Bank, Samba Financial Group and Saudi Hollandi Bank.

This is the second time that Mobily makes headlines in the Islamic financing world. In 2004, when it was first awarded the Kingdom of Saudi Arabia's second GSM license and first 3G mobile license, it raised $2.35bn in Islamic finance to kick-start the rollout of its network and commercial operations.