Africa’s biggest data centre operator taps Absa for R8 billion

Teraco Data Environments hired Absa to syndicate an R8 billion loan as the company gears up for a new facility to meet rising demand from artificial intelligence applications.

The facility will push Teraco’s capacity to 228 MW, further cementing its position as the biggest data-center company operating in Africa, according to CFO Samuel Erwin. 

“We are building the new facility to the latest hyperscaler specifications that will include the flexibility to have liquid cooling to support artificial intelligence deployment,” Erwin said in an interview.

“We are seeing demand and expecting demand for AI equipment that are power- and heat-intensive to increase.” 

The financing round led by Absa had participation from other large South African asset managers, said Erwin. In 2023, the company raised R11.8 billion to refinance debt and finish up another facility.

That will go live in the first quarter of 2025, he said.

Africa is home to the world’s fastest growing, young, and increasing tech-savvy population, that’s turning to the internet for services from banking to entertainment.

This is driving demand for data centres across a continent that holds less than 2% of installed global capacity, most of it currently in South Africa. This presents a huge business opportunity for those willing to invest. 

Operators able to achieve scale and market relevance will be best equipped to capitalize on the African market that could potentially grow to $7 billion over the next three years, according to a report by investment bank Dai Magister.

Teraco, bought by Digital Realty Trust in a deal that valued it at $3.5 billion in 2022, remains the largest data centre operator in Africa, although new entrants such as Equinix and Amazon Web Services are expanding on the continent.

Microsoft has announced it intends to build a 1 GW site in Kenya with the United Arab Emirates’ top artificial intelligence firm G42.