Read time: 3 minutes

Teraco looks to maintain dominance in Africa

By , ITWeb's news editor.
Africa , 29 Feb 2024
Jan Hnizdo, CEO of Teraco.
Jan Hnizdo, CEO of Teraco.

With competition ramping up in South Africa’s data centre space, Teraco believes there is still a lot to fight for on the rest of Africa market.

This was the word from Jan Hnzido, CEO of vendor-neutral data centre provider Teraco, in a recent interview with ITWeb.

Hzido also believes that the recent acquisition of a majority stake in Teraco by US-based Digital Realty will give the company an edge as it readies to expand its African data centre footprint.

Digital Realty – one of the largest global providers of cloud and carrier-neutral data centre, colocation and interconnection solutions – owns approximately 55% of the total equity interests in Teraco, while the remaining 45% is held by a consortium of shareholders, including management, Berkshire Partners, Permira, Van Rooyen Group, Columbia Capital, Stepstone Ventures and the Teraco Connect Trust.

The company also has a presence in Kenya and Nigeria.

Based in Johannesburg and established in 2008, Teraco is Africa’s largest data centre services provider.

Hnzido acknowledges that while South Africa will remain a key data centre hub in Africa, competition in the local market has been fierce.

According to a report by Mordor Intelligence, the South African data centre market size is estimated at 434.86MW in 2024, and is expected to reach 828.93MW by 2029, growing at a compound annual growth rate (CAGR) of 13.77% during the forecast period.

It says the South Africa data centre market is moderately consolidated, with the top five companies occupying 48.86% of the market share.

In alphabetical order, Mordor Intelligence says the major players in this market are BCX, Equinix, NTT, Teraco and Vantage Data Centres.

Locally, Teraco has been increasing capacity at its South African data centres as more organisations take their workloads to the cloud and growing competition.

“We are developing our campuses. We’ve got Isando Campus, Bredell Campus and Cape Town Campus and we are doing some developments at each of these sites where we are pretty much doubling the existing capacity,” Hnzido says.

“There is a 30MW expansion at Isando, 30MW expansion in Bredell and 31MW expansion in Cape Town.

He notes that the expansion initiatives are taking place at the same time. “We have also done a small expansion in Durban.”

“I think there is now a lot of players in the [South African] market. Just over the last three years, we probably had about four new entrants coming in. We have Vantage; we have Africa Data Centres that are expanding; we’ve got OADC [Open Access Data Centres; and Equinix,” Hnzido says

“So we have a whole lot of new competitors in the market, and I think the next frontier will be the rest of Africa.”

Mordor Intelligence adds that the Africa data centre market size is estimated at 69 000MW in 2024, and is expected to reach 1 230 000MW by 2029, growing at a CAGR of 12.34% during the forecast period.

With the same competitors as it the South African market, it says Teraco led the market in 2023, with a share of 28.9%.

As data centre operators increasingly up the ante on their African operations, Bloomberg reported last week that US-based Equinix will invest $390 million (R7.5 billion) in Africa over the next five years building data centres and expanding current operations in South Africa and the west of the continent.

“The hype [about the rest of Africa region] is slowly starting to materialise. We’ve got Kenya and Nigeria; and I think those will probably be the two biggest hubs. We’ve got some developments happening in Mozambique and Angola, which will present the next frontier or opportunity,” Hnzido says.

However, he adds: “I think South Africa is still strategic because we are at the bottom of Africa. So I think we are still going to be a hub and that’s what we are seeing – South Africa will continue to be a data centre hub for a lot of Sub-Saharan African countries, especially for the hyperscalers.”

With Digital Realty in its corner, Hnzido believes Teraco stands a better chance in winning the rest of Africa data centre fight.

“After the Digital Realty deal, we are now getting the best of both worlds in that we are still Teraco – we still have a local management team and a brand, but we are part of a big international group. Digital Realty is one of the biggest listed data centre firm in the world,” he says.

“We get the best of both worlds in that the banks are more open to lending funds to us and we are able to expand quicker.”

Last year, Teraco inked a syndicated loan facility worth R11.8 billion, which the company said it will use to drive growth and service its debt.

“It [Digital Realty] also gives us access to a broader market. There is a big world out there, and we are trying to attract them, whether it’s Digital Realty or ourselves. We want to convince organisations that South Africa is a great place to come and put down your critical IT infrastructure,” Hnzido continues.

“Africa is a big market and we are open for business; and you can see that with what’s happening today. With all the cable systems that are coming – we’ve got Equiano, which is Google-owned; and 2Africa, which is Meta-owned. All these companies are starting to see this underserviced one billion population that resides in Sub-Saharan Africa that wants access to the digital economy. That theme is going to be with us for a very long time.

“So it’s a great time to be in the data centre space in Africa because there is a lot going on.” 

Daily newsletter