As industry gears up for fibre gear- shift, data centres become the next big growth area

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Below the radar, a number of companies in a range of African countries have either installed data centres or are gearing up to do so. Some are run directly by operators, whilst others are operator-neutral. As with all of these kinds of shared facilities, trust and high levels of service will be a key issue. Russell Southwood spoke to Teraco’s CEO Tim Parsonson about why data centres and why now?

Formerly CEO of South African ISP Storm before he sold, Tim Parsonson believes that the industry is “ready for a neutral data centre player” and has long-term plans to offer this service in all of the Seacom-connected countries. But his current first priority is developing three data centres in South Africa.

Teraco Data Environments (Pty) Limited last week announced that it had topped up its operating capital with a further R50-million in a successful Series-B round of financing, consisting of equity and loans. This follows on the conclusion of a Series-A financing round of R45-million in 2008.

Its first data centre was completed in February 2009 in the same building as Verizon (now owned by MTN) in Cape Town:”It has got all carriers with redundant pairs coming in,” says Parsonson. Customers include operators like Telkom South Africa, Neotel, Fastnet, T-Systems, Dark Fibre Africa and Vodacom and service providers like Web Africa. Also certain outsourcing companies are using the data centre for back-up.

The Centre offers what is known as 5x9 availability which means almost zero downtime, excess capacity for redundancy, independent power supplies and air conditioning. All customers get a service level agreement guaranteeing these features.

As telecoms markets are liberalised and the number of operators needing to connect with each other increases, they have two choices: either build their own data centres to meet other carriers or go through a carrier-neutral data centre. The problem with the first option is that it is a “nuclear arms race” that only the larger carriers can win. So for example, IS, Telkom South Africa, BCX and Vodacom have all built their own data centres. Vodacom’s is targeted at capturing corporate voice and data.

To some this may sound very much like creating an Internet Exchange Point except much bigger and commercially run. Parsonson responds:”We will have IXPs in our facility and are able to offer very cheap, physical peering. We are keen to remain neutral and not overlap with anyone else. The aim is to start with ICT operators and go after enterprise customers afterwards. We are seeking to replicate what Telehouse and ” He believes that partnerships with existing companies like T-Systems will allow them to expand into this part of the market.

Its second data centre is in Johannesburg on a site near the airport. Currently all existing data centres are in Mid Rand and Centurion where there are mounting infrastructure issues, particularly in terms of additional power supply. Teraco’s new data centre is in Isando 20 kilometres from this area and the local municipality has guaranteed 7MVA of power. It will open at the end of this year with all of the same customers present in the Cape Town centre.

Some idea of the scale of these operations can be gained from their physical footprint. The Johannesburg facility in Isando is 3,500 sq metres and the Cape Town facility is 600 sq metres. It is also likely to build a third centre in Durban that will be the same size as the Cape Town facility. For the purposes of comparison, a data centre in a mid-scale East African market is 110 sq metres.

All of this has so for cost US$12 million. The investors in Teraco are its management and Sir Peter Michael a UK-based tech investor, who was one of the backers of Parson’s former company Storm. It also has investment from a Black-owned private equity firm.

And does he have any plans to invest outside of South Africa?:”Yes, we have plans to expand outside of South Africa but they are not concrete yet. All the Seacom-connected countries are relevant.”