In South Africa, this demand is particularly pronounced as the country positions itself as a critical hub for digital innovation and transformation across the African continent.

The data centre industry is set for substantial growth, largely fuelled by technological advancements and a rising demand for digital services.

Strategic investments and collaborative efforts will empower South Africa to solidify its role as a pivotal player in the global data centre market.

Substantial investments are being funnelled into the data centre market to keep up with technological advancements and the rising demand for digital services.

The explosion of AI applications necessitates robust data storage and processing capabilities. AI-generated content and machine learning models require vast amounts of data and computational power, both of which are provided by data centres.

Though still in its nascent stages, quantum computing promises to revolutionise data processing speeds and capabilities.

This emerging technology will further drive the need for advanced data centre infrastructure capable of supporting quantum operations.

The rollout of 5G networks enhances connectivity and increases data transfer speeds, leading to more data generation and the need for faster processing and storage solutions.

Data centres are essential to manage this increased data flow and provide the necessary computational power.

In South Africa, several key developments underscore the country’s commitment to expanding its data centre infrastructure.

Microsoft has announced plans to build out its cloud infrastructure in new areas of South Africa to meet growing demand from both public sector and private organisations. This expansion is part of Microsoft’s broader strategy to accelerate digital transformation in South Africa and across Africa.

Microsoft initially entered the South African market by opening two Azure regions in 2019, in Johannesburg and Cape Town. However, the Cape Town region was de-listed at the start of 2021 and may have been re-classified as a ‘reserved access region’.

AWS launched its own cloud region in Cape Town in April 2020. Oracle followed suit, opening its Johannesburg OCI region in January 2022.

Telkom subsidiary BCX launched an Alibaba cloud region in Johannesburg last year, and Google recently inaugurated its first GCP cloud region in Johannesburg recently.

The north and east of Johannesburg have emerged as preferred locations for major data centre operators. Areas such as Midrand, Samrand, Isando, and along the R21 highway host a high concentration of data centres, including those operated by Africa Data Centres, BCX, NTT, Vantage, and Teraco.

These areas are attractive due to the availability of suitable land and the necessary infrastructure to support large-scale data centres. However, the availability of electricity remains a critical factor in determining the viability of these locations.

South Africa’s ongoing energy challenges necessitate innovative solutions and significant investment in reliable power sources to ensure the uninterrupted operation of data centres.

As stressed, the expansion of data centre infrastructure is crucial to the country’s ability to harness the potential of AI, quantum computing, and 5G.

To meet this demand, it is essential for stakeholders, including government, private sector, and international partners, to collaborate on the development of data centres.

This includes addressing challenges such as energy availability and ensuring the necessary regulatory and policy frameworks are in place to support the growth of this critical infrastructure.

In a similar field, Teraco is a carrier-neutral data center and interconnection services provider in South Africa. The development included a consortium of investors, including Berkshire Partners and Permira and the transaction values Teraco at approximately $3.5 billion.

The acquisition of Teraco adds South Africa to Digital Realty’s three existing markets on the continent, including Kenya, Mozambique, and Nigeria. The strategic importance of these four markets has been enhanced by the recent and ongoing implementation of new subsea cable networks encircling Africa. 

Combined with Digital Realty’s highly connected facilities in Marseille, its customers have a range of strategic connectivity hubs from which to serve all corners of the African market.

As South Africa’s largest and most densely interconnected data center platform, Teraco supports the rapid growth of the continent’s internet community through its expanding portfolio of data centers. Teraco’s experienced management team, growing multi-national customer base, quality infrastructure and ownership of NAPAfrica, the continent’s largest Internet Exchange Point, are key differentiators that position the company for sustainable growth.

“We are very excited to complete this transformative transaction that positions Digital Realty as the premier data center and connectivity provider on the high-growth African continent,” says A. William Stein, Chief Executive Officer, Digital Realty.

“Today’s milestone gives us significant regional scale and access to a premier, high-quality portfolio in Africa’s largest market, enhancing our ability to serve growing customer demand for connectivity in the region. We’re thrilled to strengthen our global platform and deepen our commitment to investment in Africa, as we capitalize on the tremendous opportunity in the region.”

“Teraco has made significant progress in achieving our strategic objectives, including improving the connectivity and accessibility of our data centers, in supporting the rapid digital transformation in the region,” says Jan Hnizdo, Chief Executive Officer, Teraco.

“Africa is poised to remain a high growth, high-demand area for data center solutions and our combined, diversified platform will further enable us to support our customers in the pan-Africa region and around the world.”

With the acquisition, Teraco will be known as Teraco: A Digital Realty Company.

The transaction valued Teraco’s datacentre assets at $3.5bn. This represents the biggest datacentre transaction in the continent.

Teraco is the largest and most densely interconnected datacentre platform in Africa, with seven state-of-the-art facilities strategically located in the key South African metros of Johannesburg, Cape Town and Durban.

Teraco serves over 600 customers, including more than 275 connectivity providers, over 25 cloud and content platforms and approximately 300 enterprises.

Teraco facilitates approximately 22,000 interconnections between customers and its Isando campus in Johannesburg is one of the most densely interconnected sites in the world, with over 13,000 cross-connects.

Teraco also hosts seven on-ramps to leading global cloud service providers in Johannesburg and Cape Town and currently provides direct access to seven subsea cables in Durban on the east coast and Cape Town on the southwest coast

It is worth noting that in October 2021 the Austin Texas, USA based Digital Realty also announced the acquisition of the datacentre assets of Medallion Communications Limited in Nigeria.

That  marked the first time a global pure real estate investment trust (REIT) will be entering the country and beats rivals including Equinix (NASDAQ: EQIX), CyrusOne (NYSE: CONE), and CoreSite Realty (NYSE: COR) on entrance into the market. With the additional acquisition of Teraco, Digital Realty now controls the two most important datacentre assets in the continent.

The Medallion Data Centres Limited  is the number 1 peering and connectivity datacentre in Nigeria and Teraco represents the same in South Africa, two of the largest economies in the continent.

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, enhancing the ability to serve local as well as multinational enterprises and service providers.

When reached for comment on the development, Engr. Nnamani stated the investment into Teraco by Digital Realty is a further testament that Digital Realty is fully commitment to grow the digital economy in not only Nigeria and the West African sub-region but also the whole of Africa.

This he stated will lead to significant foreign direct investment into the economy, boosting the GDP of the African countries, creating employment, and improving the quality of the lives of the citizens in the areas of education, healthcare, e-commerce, entertainment, security, governance, and agriculture amongst others.

With the digitization of the economy and implementation of Internet of Things services, datacentres are essential to support these emerging services.

Digital Realty is the largest global provider of cloud- and carrier-neutral datacentres, colocation and interconnection solutions.

Digital Realty supports the world’s leading enterprises and service providers by delivering the full spectrum of data centre, colocation and interconnection solutions.

PlatformDIGITAL, the company’s global data centre platform, provides customers a trusted foundation and proven Pervasive Datacenter Architecture (PDx) solution methodology for scaling digital business and efficiently managing data gravity challenges.

Digital Realty’s global data center footprint gives customers access to the connected communities that matter to them with more than 280 facilities in 48 metros across 24 countries on six continents.

Medallion Data Centres Limited Lagos campus is the leading connectivity hub in Western Africa with approximately 70 carriers and internet service providers, over 80 percent of the public peering traffic of the Nigerian Internet Exchange takes place at the carrier neutral datacenter.

Medallion Data Centres Limited offers access to all the exiting sub marine cables in Nigeria and additional subsea cables scheduled to be in operation in Lagos by 2023 are all expected to use Medallion as a peering point for content and bandwidth distribution.