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Boost for Digital Realty’s bid to acquire Teraco stake

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 19 Apr 2022
Teraco’s JB3 data centre facility is located within the Isando Campus in Ekurhuleni, east of Johannesburg.
Teraco’s JB3 data centre facility is located within the Isando Campus in Ekurhuleni, east of Johannesburg.

The Competition Commission (CompCom) has recommended that the Competition Tribunal approve the proposed transaction, whereby Digital Titan intends to acquire Teraco Data Environments, with conditions.

This, after Teraco, Africa’s carrier-neutral data centre and interconnection solutions provider, in January announced that Digital Titan’s parent, Digital Realty, had entered into a definitive agreement to acquire a majority stake in Teraco from a consortium of investors, including Berkshire Partners and Permira.

In a statement today, the competition watchdog says Digital Realty is a global technology provider of data centre platforms, colocation and interconnection solutions to customers across a variety of industries, ranging from cloud and information technology services, communications and social networking, to financial services, manufacturing, energy, healthcare and consumer products.

Digital Realty designs, owns and provides global data centre platforms that support customers’ digital infrastructure and enables clients to interconnect with their customers and partners, says the commission.

It adds that Digital Realty’s data centres are located in the US, Europe, Latin America, Australia, Africa and Canada.

Digital Realty is not active and does not undertake any business activities in South Africa, says the CompCom.

It notes Teraco is a provider of data centre services. Through its seven data centres, (located in Johannesburg (Gauteng), Durban (KwaZulu-Natal) and Cape Town (Western Cape), Teraco makes data centre space available to customers who wish to retain control over their own infrastructure, but may lack the facilities to house them.

The watchdog points out Teraco offers customers rentable floor/cabinet space, adding it provides all auxiliary infrastructure services, such as monitoring power, cooling, humidity security, ancillary building systems and limited non-technical support.

“Teraco provides secure data centre solutions for cloud providers, network and telecoms providers, managed services providers, enterprises, financial services and content providers,” the regulator says.

The commission found the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets.

However, the watchdog found the proposed transaction is likely to result in a negative impact on a greater spread of ownership.

“In order to address this concern, the merging parties have agreed to the imposition of a condition that would ensure the merged entity maintains the current B-BBEE Trust and further, introduce an employee share ownership plan in the merged entity.”