Digital Realty, a global provider of cloud- and carrier-neutral data centre, colocation and interconnection solutions, has announced it has entered into a definitive agreement to acquire a majority stake in Teraco, Africa’s largest and most densely interconnected data centre platform, from a consortium of investors, including Berkshire Partners and Permira, in a transaction valuing Teraco at approximately US$3.5 billion.
The transaction follows Digital Realty’s acquisition of Medallion Data Centres, Nigeria’s leading colocation and interconnection provider and deepens its recent commitment to investing in the region over the next decade.
According to Digital Realty, this is a transformational deal that immediately establishes the company as a leading colocation and interconnection provider across the high-growth pan-African region.
In terms of the deal, Digital Realty will be acquiring all seven of Teraco’s state-of-the art data facilities strategically located in key South African metros. The Teraco platform, Africa’s largest and most interconnected data centre platform, boasts over 600 customers, more than 20,000 interconnections and seven on-ramps to leading global cloud service providers.
In addition to direct access to seven existing subsea cable systems, several consortiums of leading cloud and content platforms are currently building three additional subsea cables which are expected to land over the next three years.
The combination of Teraco’s leading position in South Africa with Digital Realty’s leading connectivity hubs in Nigeria on the west and Kenya on the east coast – along with Digital Realty’s strategic Mediterranean interconnection hubs in Marseille and Athens – is expected to significantly strengthen Digital Realty’s leading pan-African position.
Industry analysts predict that the total addressable data centre market in Africa is expected to expand significantly over the next several years as the total population of Africa is nearly 1.4 billion or more than 15% of the world’s total population, with a median age of just 20 years.
Digital Realty stated that Digital Transformation is accelerating and is happening in South Africa first and radiating across the African continent.
The company said the Teraco management team will remain in place and will maintain day-to-day responsibility for operations in South Africa. The Teraco management team is led by Jan Hnizdo, CEO, a longtime team member who has helped drive Teraco’s significant growth over the last decade.
Teraco has historically generated healthy double-digit growth in key financial metrics, including revenue, EBITDA and participants on its platform. The Teraco platform contains 187 megawatts of total planned capacity, including seven in-service facilities totaling 75 megawatts and one development project totaling 19 megawatts currently under construction.
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