US-listed Digital Realty, which owns, acquires, develops and operates data centres, has agreed to buy a major stake in Africa’s largest data centre provider, Teraco, in a deal that values it at about R55.5bn.
With world-class data centre infrastructure Teraco holds 40% of data centre capacity within Sub-Saharan Africa and its internet exchange, NAPAfrica, is the world’s seventh largest.
The company, which has been on an aggressive expansion drive in recent years, has seen an increase in companies wanting access to its centres to store and process large amounts of data.
Demand for data centers, which are physical spaces housing computers that store and process data, has been boosted by global lockdowns that have increased remote working.
Teraco operates seven high-quality facilities with 75MW of critical power load to serve more than 600 clients from its Johannesburg, Durban and Cape Town facilities.
Operating in 26 countries across six continents, Digital Realty has more than 280 data centres across the world.
When the deal is concluded in the first half of 2022 Digital Realty will own approximately 55% of the total equity interests in Teraco and will retain its staff in SA.
The remaining 45% will be held by a consortium of existing shareholders, including management, Berkshire Partners, Permira, Van Rooyen Group, Columbia Capital, Stepstone Ventures and the Teraco Connect Trust.
In a statement on Tuesday, Teraco said the Digital Realty transaction will result in a powerful combination providing it continued access to capital to grow while also allowing it access to skills and knowledge from the global leader.
“Our combined platform will be uniquely positioned to serve the full customer spectrum with the ability to support their growth around the world,” said Teraco CEO Jan Hnizdo.
“We look forward to working with the Digital Realty team to extend our state-of-the-art data centre and connectivity solutions to capitalise on the favourable industry trends and tremendous market opportunity,” he said in a statement.
Digital Realty CEO William Stein said the investment would enhance the global player’s ability to serve customers on a global basis by adding significant regional scale with a premier, network-dense portfolio in SA’s most strategically important metro areas.
“This highly strategic transaction immediately cements Digital Realty as the leading co-location provider in Africa, a region experiencing rapid digital transformation,” said Stein.
Teraco would also advance Digital Realty’s strategy of increasing exposure to highly connected network- and carrier-dense facilities, he said.
The transaction is expected to be about 1% dilutive to Digital Reality’s core funds from operations per share in 2022, but be breakeven in 2023, and add to it thereafter. This is a measure of operational cashflow.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.