Digital Realty data centre to buy majority stake in Africa's Teraco

(Reuters) - Data centre operator Digital Realty Trust said on Monday it would acquire a majority stake in Africa-based Teraco, valuing it at about $3.5 billion, as it taps into fast growth in Africa, driven by the pandemic.

Home-working as governments try to contain COVID-19 has increased the need for data centres, or physical spaces that house computers to store and process data. In a series of multi-billion-dollar deals, infrastructure and real estate funds have entered the sector.

In a statement issued from Texas, the United States, Digital Realty, which has more than 280 data centres across the world, said it would buy the 55% stake in the Johannesburg-based data centre services provider from a consortium of investors including Berkshire Partners and Permira.

The deal is expected to be about 1% dilutive to Digital Realty's core funds from operations (FFO) per share in 2022 and add to it after 2023.

Digital Realty CEO William Stein said the deal would add regional scale with a "network-dense portfolio in South Africa's most strategically important metros".

Africa's data centre market has seen particularly rapid growth from a relatively low base as companies see local cloud storage as a way to save costs by renting storage rather than building their own servers or relying on other countries.

Data consumption on the continent is also rising as carriers and tech companies roll-out fibre-optic cables to provide more reliable and faster internet. With this comes the need for secure local data hosting.

Teraco operates seven data centres in Johannesburg, Durban and Cape Town, serving more than 600 clients, including global internet companies.

($1 = 15.9790 rand)

(Reporting by Chavi Mehta in Bengaluru, additioal reporting by Nqobile Dludla in Johannesburg; Editing by Devika Syamnath and Barbara Lewis)

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