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Teraco gets R2.5bn loan funding for data centre construction

By , ITWeb senior news journalist.
Africa , South Africa , 02 Feb 2021

Carrier- and cloud-neutral co-location data centre solutions provider Teraco Data Environments today announced it has finalised a R2.5-billion loan financing transaction led by Absa.

The loan follows Teraco’s announcement in November that it would invest R4.4 billion in Africa’s largest data centre project, a new 38-megawatt hyperscale data centre in Ekurhuleni, east of Johannesburg.

The facility, known as JB4, is scheduled for completion in Q1 2022, and as a standalone building, will be the largest data centre in Africa, comprising 50 000sqm of building structure serviced by 80MW of utility power supply.

Teraco chief financial officer Samuel Erwin.
Teraco chief financial officer Samuel Erwin.

In an interview with ITWeb, Teraco chief financial officer Samuel Erwin said the funds raised, together with internally-generated cash flow, will be used to finance the two phases of the construction and for job-creation.

“The R2.2 billion loan, which is included in the R4.4 billion commitment, is earmarked for the Ekurhuleni construction site and mission-critical infrastructure. We are looking at creating around 100 permanent Teraco jobs once the data centre is in operation, but there will be a lot more jobs created during the construction phase of the project,” explains Erwin.

More than 600 global organisations − including enterprises, tier one carriers, fintech firms, global and local cloud content integrators, ISPs, security and storage companies − are co-located within Teraco.

The JB4 facility is Teraco’s seventh data centre development and is located in Bredell, in the heart of the Ekurhuleni Aerotropolis.

The company says the new transaction cements Teraco’s commitment to continuing investment in the region’s digital infrastructure and aligns with the vendor-neutral data centre provider’s support of the South African government’s investment drive.

At last year’s edition of the SA Investment Conference, Teraco was among dozens of IT companies that pledged billions towards the advancement of SA’s ICT sector, committing R4.4 billion, which would be channelled towards its multiple data centre projects.

“We are currently expanding our already existing data centre, which is based in Isando. We are also building another data centre based in Cape Town, which is expected to create 50 permanent jobs and a lot more jobs during the construction phase,” adds Erwin.

“The cloud industry in SA is experiencing tremendous growth. We are building to meet our clients’ demand – who are a combination of cloud providers, telecoms operators, South African corporates and enterprises – and this infrastructural investment has many positive spinoffs on the sector, and in turn, SA’s economy.”

JB4 is the latest expansion to Teraco’s growing data centre platform and takes critical power load capacity at Teraco facilities to over 110MW, which includes the Isando Campus JB1/JB3 (39MW), Bredell JB2 (13MW), Rondebosch Cape Town CT1 (3MW), Brackenfell Cape Town CT2 (18MW) and Durban (1MW).

Long-term vision

Teraco’s data centre project comes at a time when there is much activity in SA’s data centre sector, with several companies last year establishing data centre regions, including Amazon Web Services and German start-up CloudRadar.

US-based enterprise software company Oracle has confirmed it will launch its data centres in SA this year, while last year, systems integrator Dimension Data also told ITWeb of its plan to imminently launch data centres in SA.

The investments in data centres and a confluence of existing factors driving cloud migration in SA have been further accelerated by the COVID-19 crisis.

Teraco says it is making significant investments in providing access to digital infrastructure that is resilient and highly flexible. This offers enterprises the ability to scale as network strategies evolve in a world where fast and secure inter-connection with strategic business partners is a source of competitive advantage.

According to a statement, the shareholders and lenders of Teraco have a long-term vision for Africa’s digital transformation and support its continued investment in data centre infrastructure to serve the Sub-Saharan African market.

The funding transaction includes several large lending institutions that have joined Absa, with a view to creating long-term partnerships that will support Teraco’s future expansion plans, notes Erwin.

“Absa has continued along the growth path with Teraco. Their understanding of our business model and funding requirements and ability to offer tailored funding solutions to suit our needs has contributed to Teraco’s success,” says Erwin.

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