US Data Center Operator Equinix Plans $390m Africa Build

(Bloomberg) -- Nasdaq-listed Equinix will invest $390 million in Africa over the next five years building data centers and expanding current operations in South Africa and the west of the continent.

The California-based data center operator is also pursuing opportunities in East Africa and will potentially spend more to build or acquire there, recently appointed managing director for South Africa, Sandile Dube, said in an interview. 

“We will continue to invest where it makes sense on the continent, and we are undergoing a number of studies to ascertain these opportunities,” Dube said. “The money planned for investment includes the construction of data centers at our current operations, but excludes plans for additional markets.”

Tech giants such as US-based Amazon.com, Microsoft Corporation and China’s Huawei Technologies Company have been investing in data centers in Africa in recent years as demand for connectivity and storage grows. The continent accounts for just 1% of global data center capacity, creating a large opportunity for investors that want to tap into the region’s growth potential, while taking on certain operating risks such as an unreliable power supply. 

Africa is home to a young and tech savvy population with increasing access to the internet that is providing a boon for the industry, albeit from a low base. Equinix entered the continent two years ago with the $320 million acquisition of MainOne Cable Co. and started building its first data center in Johannesburg, South Africa, in 2023. 

Related:New Data Center Developments: February 2024

“We’re going to need key hubs on the continent as we have in Europe, which is why we have started with Lagos, Joburg and, in time, we would like to add Nairobi,” Dube said.

Equinix typically prefers acquisitions when entering a new market, although in certain cases such as South Africa it decided to build its own data centers, he said.