Teraco soars on a cloud of connectivity and big-data growth
● An investment of R1-billion in South Africa’s biggest vendor-neutral data centre points to an explosion in demand for off-site and cloud-based storage.
Teraco, which last year secured a R1.2-billion loan to build a new data centre at Bredell, east of Johannesburg, announced this week it would invest a further R1-billion to expand its facility in Isando. Its largest infrastructure project yet, the expansion will comprise two phases between now and 2021. Phase 1, due for completion late next year, will increase usable floor space 50% to 12 000m².
Jan Hnizdo, chief financial officer of Teraco, said the Isando campus already served more than 400 enterprise customers and 200 telecommunications providers.
“The real measure, though, is interconnects, where we connect one party with another, to allow key connectivity providers to pick up key content directly from content providers. We have about 12 000 interconnects across the country, and Isando has close to 8 000. If you look at highly connected data centre sites around the world, they are not much different, typically housing between 6 000 and 12 000 interconnects. So Isando has become this big interconnect hub. That has always been our strategy.”
Analysts have frequently commented on the massive growth of storage demand in South Africa. Mark Walker, sub-Saharan Africa regional vice-president for the Interply, national Data Corporation, ascribes the new investment to “huge increases in the need for storage and management of data, based on rapidly increasing use of cloud-based platforms”.
He says: “Public cloud services will grow at around a 19% compound annual rate over the next five years, and are presently growing at over 20% year on year.
“Furthermore, artificial intelligence usage is growing at a five-year compound annual rate of over 40%. It’s a nascent market, hence there is rapid growth off a low base. The use of algorithm-based, big-data engines for enterprise decision systems means that companies like Teraco are an essential aspect of business now and in the future.”
Teraco collaborates with global providers of cloud computing and storage services. According to Hnizdo, the recent announcements of direct interconnection to cloud onramps like Amazon Web Services Direct Connect and Microsoft Azure ExpressRoute have given Teraco a boost.
“The Teraco platform allows enterprises to have direct private connections to all the leading cloud providers in the most latencyefficient and resilient manner possible. Our strongest vertical industry when we started was telecoms companies connecting on a vendor-neutral platform. Then content providers arrived because with one deployment they could hit multiple carriers. Just being in Teraco, you reach Vodacom, Telkom, Internet Solutions, Liquid Telecoms, Seacom, and many others.”
Teraco is also benefiting from growing demand across Africa, says Hnizdo.
“Pretty much every major carrier providing services on the African continent has a telco node at Teraco. If you’re in Nigeria or Kenya, you can pick up content directly from Europe, because latency is pretty good from there, but it’s too long for all countries underneath; they would rather pick it up from Teraco in Johannesburg than from the UK, because latency is far lower via this route.
“Most of the content transit for companies in Malawi, Namibia, Botswana, Zimbabwe, Mozambique, Angola, Zambia, and even further up, comes through Teraco.”
Over the past 18 months Teraco has made a major foray into the public cloud market, working not only with Amazon Web Services and Microsoft but also Google and Netflix, which deliver most of the video content viewed online in South Africa. At the same time, growing demand from financial services organisations has allowed it to expand its business offerings.
The power demands are massive. The Isando campus presently has a 20MW sup-
The announcement had a halo effect. Everyone benefits from a top-tier provider committing to the local market Jonathan Tullett
Senior analyst, International Data Corporation
which is being expanded to 80MW — enough to power a small city.
“We complain about Eskom, but compared to the rest of Africa, our grid is really good, access to build infrastructure is really good, and we have the expertise to build bigdata centres. This attracts global players. The whole legal framework is probably half of these guys’ consideration, because they are able to enforce contractual rights. If you take all these factors into consideration, it’s a fantastic story for South Africa.”
Walker agrees, pointing out that key considerations for corporates include the security and reliability of these data centres. And not many providers can compete.
“Teraco has few direct competitors locally. Indirect competitors would include onpremise corporate data centres at mainly financial or governmental institutions, where customer data and enterprise management systems are considered to be sensitive corporate assets . . . thus possibly unsuitable for off-site storage and management.”
Last year’s announcement by Microsoft that it would build two data centres in South Africa, it appears, has been a boost rather than a challenge to Teraco.
“The announcement had a halo effect on the cloud business,” says Jonathan Tullett, senior analyst at the International Data Corporation. “Everyone benefits from a top-tier provider committing to the local market. We have Amazon’s regional rumblings getting louder . . . That’s all helping confidence and momentum.”