Permira funds back African IT expansion with acquisition of data services firm

Out-Law News | 05 Dec 2014 | 4:36 pm | 1 min. read

International private equity firm Permira is to acquire South African data centre services provider Teraco Data Environments , in a partnership with Teraco’s management to support the firm’s expansion into sub-Saharan Africa’s (SSA) growing IT services and telecoms market.

Teraco, which Permira said is the largest provider of carrier neutral data centre services in SSA, hopes to tap into rising internet usage and increased data centre outsourcing.

Teraco currently manages co-location data centres in Cape Town, Durban and Johannesburg.

Permira said Teraco had built “an important strategic position” and its funds’ investment will support Teraco’s growth plans “including the strengthening of its sales and marketing platform and its expansion into SSA”.

The firm’s acquisition by Permira, which is subject to various regulatory approvals, is expected to be completed in the first quarter of 2015.

Permira said Teraco’s data centres “are the most interconnected in SSA, with customers connecting directly with each other, as well as through the region’s largest and fastest growing internet exchange (IX) point NAP Africa”.

NAP Africa, an IX point located within each of Teraco’s data centre facilities in South Africa, provides a single peering point that allows multiple networks and ISPs to interconnect using an exchange environment, instead of what Teraco said would be “costly multiple direct links to different providers”.

The data services market in South Africa “is growing rapidly, with only one tenth of data centre facilities outsourced compared with a third in the US and a quarter in Europe”, Permira said.

According to a survey published by Swedish technology company Ericsson earlier this year, digital technology is "fast becoming a part of everyday life" in SSA while total mobile subscriptions are rapidly catching up with those globally. The region's mobile data traffic is predicted to grow around 20 times between the end of 2013 and the end of 2019, by which time Ericsson has predicted that there will be around 930 million mobile subscriptions in the region.

The African Union’s ‘action plan’ for Africa up to 2015 (104-page / 1.53 MB PDF) said access to advanced information communications technology (ICT) is critical to the long-term economic and social development” of the continent.

“It has increasingly become essential that appropriate ICT infrastructure, applications and skills are in place and accessible to the population to close the development gap between Africa and the rest of the world,” the plan said.