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Teraco concludes $170 million funding for data center in South Africa

Teraco Data Environments, Africa’s largest data center company, has raised $170 million to fund construction of a new facility in South Africa.

The financing arrangement was led by Johannesburg-based lender Absa Group, and will help Teraco construct a seventh site in Africa’s most developed nation, according to Chief Financial Officer Samuel Erwin.

This follows the company’s announcement in November 2020 regarding its construction of a new 38MW hyperscale data center in Ekurhuleni, east of Johannesburg, South Africa.

Teraco said it will use the funds raised together with internally generated cash to finance the build and plan on continuing its investment in the region’s digital infrastructure.

“We do see continued growth in South Africa and this will form a big part of our focus for the next two to three years,” said Erwin, who joined the company last year from Barclays Africa. “We are focused on growth, which is always capital intensive, and that means we will always be capital hungry.”

Global firms such as Microsoft, Amazon and Huawei have all began providing cloud services in South Africa recently with demand set to rise as telcos including Vodacom and MTN Group start to roll out 5G networks. The country’s regulator is also due to auction new broadband spectrum in March, though the process is subject to legal challenges.

Erwin joined the company in 2020 and leads a team responsible for providing debt financing to Teraco clients across the African continent.

He says that this funding round, and continued investments in data centre construction, align with Teraco’s support of the South African Government’s investment drive and Teraco’s 2020 commitment to invest billions of Rands into South Africa’s digital infrastructure.

The funding transaction, led by Absa, includes several large institutions that have joined the lending group, with a view to creating long-term partnerships that will support Teraco’s future expansion plans.

“Platform Teraco provides enterprises with a direct private connection to all leading cloud providers in the most latency efficient, secure and resilient manner possible,” said the company.

“Enterprises can deploy their private, public and hybrid cloud strategies on Platform Teraco, which allows for complete freedom of choice from a cloud provider perspective, as well as significantly reducing the time and cost for enterprises to access these cloud platforms.”

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