Teraco CEO Jan Hunizd.
As competition intensifies in South Africa's data center sector, Teraco believes there is still much to contend with in other African markets.
That's what Jan Hnizdo, CEO of vendor-neutral data center provider Teraco, said in a recent interview with ITWeb.
Hnizdo believes that US-based Digital Realty's recent acquisition of a majority stake in Teraco will give the company an advantage as it prepares to expand its data center footprint in Africa.
Digital Realty is one of the world's largest providers of cloud and carrier-neutral data center, colocation and interconnection solutions and owns a total of 55% of Teraco. The remaining 45% is held by a coalition of shareholders including management, Berkshire Partners, Permira, Van Rooyen Group, Columbia Capital, StepStone Ventures and Terraco Connect Trust.
Based in Johannesburg and founded in 2008, Teraco is Africa's largest data center services provider. The company also has locations in Kenya and Nigeria.
Hnizdo acknowledges that while SA remains Africa's leading data center hub, competition in the local market is fierce.
According to a report by Mordor Intelligence, the South African data center market was estimated at 434.86MW in 2024 and is projected to reach 828.93MW by 2029, at a compound annual growth rate (CAGR) of 13.77% during the forecast period. grow in
It said the South African data center market is moderately consolidated, with the top five companies accounting for 48.86% of the market share.
According to Mordor Intelligence, the key players in this market are, alphabetically, BCX, Equinix, NTT, Teraco, and Vantage Data Centers.
As competition intensifies and more organizations move workloads to the cloud, Teraco has increased the capacity of its data centers in South Africa.
“We are developing campuses. We have an Isando campus, a Bredell campus and a Cape Town campus, and we are doing some development at each of these locations, almost doubling our existing capacity. ” says Hunizd.
“There is a 30MW expansion in Isando, a 30MW expansion in Bredel and a 31MW expansion in Cape Town.”
He points out that expansion efforts are also taking place at the same time. “We also did a small expansion in Durban.”
“I think there are a lot of players now.” [South African] market. In the last three years alone, he's probably had about four new entrants come in. Data centers in Africa are expanding. There is an OADC [Open Access Data Centres]; and Equinix,” Hunizd said.
“So there are a lot of new competitors in the market. I think the next frontier will be the rest of Africa.”
Mordor Intelligence added that the African data center market was 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.
The company said its competitors were the same as in the South African market, with Teraco leading the market in 2023 with a 28.9% share.
As data center operators increasingly expand their operations in Africa, Bloomberg reported last week that US-based Equinix will invest $390 million (R7.5 billion) in Africa over the next five years and expand its operations in South Africa. It was reported that the company plans to build a data center and expand its current business. and the west side of the continent.
“Hype [about the rest of Africa region] It's gradually starting to become a reality. There's Kenya and Nigeria, and I think those are probably his two biggest hubs. There are some developments going on in Mozambique and Angola that will bring the next frontiers and opportunities,” Hunizd said.
But he added: “I think SA is still strategic because we are at the bottom of Africa. I think we will continue to be a hub and that is what we are seeing. SA will continue to be a data center hub for many countries in sub-Saharan Africa, especially hyperscalers.”
Hnizdo believes Teraco would benefit from having Digital Realty in its fold. “Following the deal with Digital Realty, we now have the best of both worlds in that we are still Teraco. We still have a local management team and brand, but with a large international group. Digital Realty is one of the world's largest publicly traded data center companies.
“Banks are more open to lending us money and we can expand more quickly.”
Teraco announced last year that it had entered into a syndicated loan facility worth R11.8 billion, which it would use to boost growth and repay debt.
“that [Digital Realty] It also allows access to a wider market. There's a big world out there, and we're trying to attract that world, whether it's Digital Realty or ourselves. We want to convince organizations that SA is the best place to take down their critical IT infrastructure,” he continues Hnizdo.
“Africa is a big market and we are open for business. You can see that by looking at what is happening today. Upcoming cable systems include Equiano, owned by Google, and 2Africa, owned by Meta. All these companies are becoming aware of this underserved billion population in sub-Saharan Africa who want access to the digital economy. This topic is very relevant to us. It will last a long time.
“There's a lot going on in Africa and it's a great time to be in the data center space.”