Space saver:  Lex van Wyk, CEO of Teraco, is responding to more demand for cloud computing. Picture: SUPPLIED
Space saver: Lex van Wyk, CEO of Teraco, is responding to more demand for cloud computing. Picture: SUPPLIED

Data centre company Teraco plans to spend R2bn on expanding its capacity in SA amid growing demand for cloud computing services, says CEO Lex van Wyk.

Teraco would nearly double its capacity over the medium term by adding to its facilities in Johannesburg and Cape Town, Van Wyk told Business Day.

The company, which has two facilities in Johannesburg and one each in Cape Town and Durban, was finalising a R1.8bn debt facility with Absa to fund the expansion.

Teraco would upgrade its centre in Durban and increase capacity in Cape Town from 3MW of power consumption — the industry’s standard measure of capacity — to 5MW. In Johannesburg, the vendor-neutral company would invest further in its new facility in Bredell and would grow its flagship unit in Isando.

"Our current site [at Isando] is 20MW and we’d be looking to expand that by approximately 40MW over time. We own two properties across the road and the idea is, within the next month or two, to kick off civil works to commence with the new build."

Teraco would add 16MW of capacity at Isando in the first phase and 24MW thereafter. That would take the company’s total capacity from 50MW currently to more than 90MW. Teraco is already one of Ekurhuleni Metropolitan Municipality’s 10 largest power users.

Van Wyk, who estimated that Teraco had a 30% share of SA’s outsourced data centre market, said the company’s customer base was becoming increasingly "active". The number of interconnects within its data centres — or connections between customers, including cloud operators, content providers and telecommunications firms — had reached 12,000 and that number was growing by about 250 a month.

Demand for outsourced data centre space was being driven by content providers, cloud companies, the enterprise market and financial services companies. Teraco has partnerships with cloud providers Amazon, Microsoft and Google.

Organisations were increasingly outsourcing their data centre requirements as it was difficult to accurately forecast storage and power requirements, Van Wyk said.

Meanwhile, Teraco was unlikely to seek a listing on the JSE as local debt markets "understand us pretty well" and the company could also access funds from its parent, London-based private equity company Permira, if need be.

Africa’s data centre industry grew by about 16% in 2017 and SA, which accounted for "probably 90% of the sub-Saharan market", grew at a similar rate, |Van Wyk said.

Thanks to SA’s stable electricity grid, rule of law, fast data transfer speeds and infrastructure, SA had established itself as a data centre hub for the continent, he said.

Search engines and video-on-demand companies, for instance, preferred to service the continent from large facilities in SA rather than having smaller deployments across the continent. However, Teraco would monitor the development of fledgling data centre companies elsewhere in Africa and would consider acquiring these.

hedleyn@businesslive.co.za

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