Teraco raises R11.8 billion to expand data centres across Africa

Teraco Data Environments, Africa’s largest data centre company, raised R11.8 billion rand ($680 million) in funds to assist with its expansion plans and power build-out, said its Chief Financial Officer Samuel Erwin.

Just under half of the loan financing, which was led by South Africa-based lender Absa Group, will be used as growth capital to build out the company’s solar capacity and data centres, Erwin said.

The rest will be used to refinance its current facilities, which are spread across Johannesburg, Cape Town, and Durban.

“We have set a target to generate half of our power from clean energy sources by 2027, and all of it by 2035,” Erwin said.

In an effort to meet that target, the company will build a utility-scale solar farm capable of generating 100 megawatts of power and is adding solar panels to the roofs of its data centres, he added.

South Africa has struggled with crippling power cuts in recent years, and many of the country’s largest businesses have started to build facilities to generate their own power.

Data centres are generally high power users, and shifting to renewable energy sources can help keep running costs low while reducing emissions.

Teraco will start building the 100-megawatt solar farm once it has the necessary approvals from the South African government and public utility Eksom to connect it to the grid, Erwin said, adding that negotiations have been slow.

Africa is home to almost a fifth of the world’s population and is growing faster than any other continent, yet it only accounts for 1% of the world’s data centre capacity, according to Cisco.

That capacity needs to be expanded to meet the demand of more people and businesses using the internet and cloud services.

Teraco’s planned expansion will almost double its data centre capacity to just under 200 megawatts over the next three to four years, Erwin said.

A deal by San Francisco-based Digital Realty Trust to buy a majority stake in Teraco last year valued the company at about $3.5 billion.

Teraco remains the largest data centre operator in Africa, although new entrants such as Equinix and Amazon Web Services are looking to expand on the continent.