The deal will help Digital Realty to considerably boost its pan-African position to increase its ability to serve domestic and global enterprises and service providers


A hyperscale data centre of Teraco in Cape Town. (Credit: Teraco Data Environments)

Digital Realty has agreed to acquire a majority stake in Teraco Data Environments, a South Africa-based carrier, cloud and vendor neutral data centre provider, in a deal that values 100% of the latter at around $3.5bn.

The stake will be acquired by Digital Realty from a group of investors, which include Berkshire Partners and Permira. Based in the US, Digital Realty is a real estate investment trust that owns, acquires, develops, and operates data centres.

As per the terms of the deal, Berkshire Partners and the Permira funds along with an existing investor van Rooyen Group will hold on to a minority stake in Teraco.

Teraco’s CEO Jan Hnizdo will continue to lead the firm and alongside the current management team will remain to be its significant investors.

Currently, Teraco is said to be Africa’s largest and most densely interconnected data centre platform. The company operates seven facilities located in Johannesburg, Durban, and Cape Town in South Africa.

It is claimed to serve more than 600 customers, which include over 275 connectivity providers, more than 25 cloud and content platforms, and nearly 300 enterprises.

Besides, the company hosts seven on-ramps to major global cloud service providers in Johannesburg and Cape Town. Currently, Teraco offers direct access to seven subsea cables in Durban located on the east coast and Cape Town on the South African southwest coast.

Teraco CEO Jan Hnizdo said: “We are excited to enter our next chapter by joining forces with Digital Realty to create a truly global, scaled platform serving our customers in Africa and beyond.

“Our combined platform will be uniquely positioned to serve the full customer spectrum with the ability to support their growth around the world.”

Digital Realty said that the deal will allow it to combine Teraco’s position in South Africa with its own connectivity hubs in Nigeria and Kenya along with its Mediterranean interconnection hubs. This is expected to help Digital Realty considerably bolster its pan-African position to improve its ability to cater to domestic and global enterprises and service providers.

Digital Realty CEO William Stein said: “Teraco is the industry leader in South Africa and the continent’s connectivity hub.  This investment will enhance our ability to serve customers on a global basis by adding significant regional scale with a premier, network-dense portfolio in South Africa’s most strategically important metros.

“Teraco will also advance our strategy of increasing exposure to highly connected, network- and carrier-dense facilities to enhance our global coverage and connectivity capabilities.”

The deal, which is subject to regulatory approvals in South Africa, is anticipated to close in the first half of this year.