Teraco to Expand Data Centers With $680 Million in Debt Funding

African colo Teraco, which is owned by Digital Realty, expands its data center footprint by adding 100MW of capacity.

Bloomberg News

February 1, 2023

2 Min Read
South Africa country on a world map.
Iulian Dragomir / Alamy

(Bloomberg) -- Teraco Data Environments Ltd., Africa’s largest data-center company, raised 11.8 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 Ltd., will be used as growth capital to build out the company’s solar capacity and data centers, 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 centers, 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 centers 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 center 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 center capacity to just under 200 megawatts over the next three to four years, Erwin said. 

A deal by San Francisco-based Digital Realty Trust Inc. to buy a majority stake in Teraco last year valued the company at about $3.5 billion. Teraco remains the largest data center operator in Africa, although new entrants such as Equinix and Amazon Web Services are looking to expand on the continent.

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