Why South Africa’s biggest data centre company is worth over R50 billion

South Africa’s biggest data centre operator, Teraco Data Environments, has been instrumental in growing Internet traffic and reducing the cost of broadband in the country.

Founded in 2008 by Tim Parsonson and Lex van Wyk, Teraco has grown its facilities to become the biggest data centre platform in Africa.

The recent announcement that San-Franciso based real estate investment trust Digital Realty planned to acquire a 55% stake in Teraco gave the company a valuation of $3.5 billion (R53.6 billion).

Digital Realty is the world’s largest investor in carrier-neutral data centres that provide colocation and peering services.

With over 22,000 interconnects, Teraco has the most interconnected facilities in Africa, meaning it holds significant strategic value for Digital Realty’s plans on the continent.

In South Africa, the company currently has seven data centres across three metros—Johannesburg, Cape Town, and Durban—offering a total space of approximately 48,000m².

In Johannesburg, there are the JB1 and JB3 facilities at Isando and the JB2 and JB4 centres in Bredell. The Isando campus will be expanded with another facility (JB5) in future.

Cape Town has two facilities — one in Rondebosch (CT1) and another in Brackenfell (CT2). A future expansion is planned for Brackenfell, which will be called CT3.

The final data centre is located in Durban’s Riverhorse Valley and is called DB1.

Combined, these seven facilities have an IT power capacity of 75MW.

Teraco’s additional planned rollouts will add another 35,000m² of hosting space.

Among the planned developments, Teraco will expand facilities on land it owns adjacent to its Johannesburg and Cape Town campuses. That will support a further 93 megawatts of capacity.

Another project which is currently under construction will add another 19MW capacity.

Overall, it expects its envisioned developments to increase total critical IT power capacity to 187MW — more than the largest solar power plant in South Africa can generate.

Among Teraco’s prominent achievements was 2012’s establishment of NAPAfrica in Johannesburg, a non-profit, neutral Internet Exchange Point where companies can host their online content and services.

NAPAfrica has given South African Internet users low-latency access to data and apps and helped bring down the costs of local and international data transit, making it possible for Internet service providers (ISPs) to offer more affordable broadband packages.

Teraco told MyBroadband there were now 530 companies peering at NAPAfrica, including major international players like Amazon, Google, Facebook, Microsoft, and Netflix.

Last year, the company saw a “huge increase” in enterprise peering, primarily driven by businesses wanting to reach key content and cloud applications.

“We also saw an increase in enterprise wanting to peer with the ISP community to facilitate the increased broadband capacity demand from remote working,” Teraco said.

“We have seen the continued demand in countries throughout Africa wanting to peer with NAPAfrica to access key content and cloud applications as well as the continued drive to keep African routes in Africa.”

The graph below shows how Internet traffic and networks peering through NAPAfrica increased from 2014 to 2021.

According to the latest data, NAPAfrica traffic throughput hit 2.2Tbps during December 2021.

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