Data centre hype ‘being realised’

DATA centres are suddenly de rigueur in Africa, with new facilities being built across the continent as telecommunications operators and independent infrastructure providers cater for rapidly expanding demand from African consumers for cloud-based services, including video on demand.

“The data centre hype is finally being realised in Africa,” said Standard Bank head of telecoms and media Nina Triantis.

“People have been talking about data centres for a long time, but in sub-Saharan Africa — outside South Africa — the lack of infrastructure and power has meant it has been difficult.”

There also hasn’t been big demand from international players such as Microsoft, Amazon, Google and Facebook, but these companies are now turning to emerging markets for future growth.

In South Africa, the data centre market has always been better developed than in the rest of the region, but demand continues to expand thanks to a growing trend by big companies, including banks, to outsource IT operations. This is fuelling demand for data centre capacity and enterprise cloud offerings, she said.

Teraco, the largest independent data centre operator in Africa, is building a vast centre on the East Rand and has facilities in Cape Town and Durban.

“You are going to see more [Teracos]. Several players are looking to build regional or pan-African platforms,” Triantis said.

Also fuelling growth is the ongoing convergence between telecoms and traditional IT. As their traditional voice businesses come under pressure, mobile operators in particular are pushing into enterprise services. Some — like Dimension Data with Internet Solutions — are already well positioned. Others, like Telkom, which acquired Business Connexion for R2.7-billion last year, are buying expertise.

However, Triantis does not expect a string of Telkom/BCX-type deals to follow, because there simply aren’t that many to buy.

Instead, she expects more deals between African mobile operators and private equity investors.

One recent deal involved the sale of 60% of Telkom Kenya to Helios Investment Partners. Similar deals could follow, especially as companies like Bharti Airtel — under pressure in India, its home market —and Millicom try to offload African assets.

It is possible Vodacom and MTN could play a big role in NO MERGERS: Nina Triantis consolidation on the continent, but “no one wants to go into the small countries” anymore.

“They will consider transformational or needle-moving opportunities that properly diversify their exposure. If there were such an opportunity for MTN, then possibly you’d see it doing that. In the shorter term, the focus does not seem to be driven by mergers and acquisitions, but more operational.”

Triantis downplayed speculation that MTN is planning a big move into financial services following the appointment of three executives from that sector — incoming CEO Rob Shuter, incoming chief financial officer Ralph Mupita and new strategy, mergers and acquisitions chief Stephen van Coller.

“For telcos, it’s mainly what they do with their mobile financial services platform and not necessarily about an M&Adriven strategy.”