Equinix to Invest $160 Million in South Africa Data Center Entry

(Bloomberg) -- Equinix Inc. plans to invest $160 million to build its first data center in South Africa, as part of the firm’s African expansion push. 

The US data center company will build its first facility in Africa’s richest city, Johannesburg, and expects to be operational by mid 2024, said Equinix EMEA president Eugene Bergen in an interview. The deal follows its acquisition of Nigeria’s MainOne, that valued the west African data center business at $320 million. 

“South Africa was a big target for Equinix as it is the most developed economy in sub-Saharan Africa,” said Bergen. “We are focusing to get into Africa, and we are looking at another five or six countries to enter.”

California-based Equinix is looking to take advantage of a predominantly young African population with increasing access to the internet that is providing a boon for the industry, albeit from a low base. 

With the South African deal, the global data center investor plans to serve large enterprises such as banks, content and media companies, and hyper-scalers operating in the country and on the continent, said Bergen. The company is seeking anchor customers that it could potentially follow to other African countries, said Bergen. “We expect the customer ramp-up in South Africa to go quite quickly,” he said.

Tech giants such as Amazon.com Inc. and Microsoft Corp. have also invested in data centers in African countries in recent years as demand for 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. 

While South Africa is home to the largest electricity supplier on the continent through its utility Eskom, there have been significant power interruptions as it struggles to replace its aging plants and meet growing power demand. Equinix’s Bergen said energy reliability was a strong focus for the business across its operations, and it takes various steps to ensure a stable supply including building its own power capacity, installing multiple back-up generators and making deals with local grids. 

Nasdaq-listed Equinix owns 249 data centers and operates in 32 countries. The South African deal comes soon after the company announced plans to expand into Indonesia and Malaysia. 

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