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Mega SA data centre investments to continue

Read time 4min 10sec

The aggressive investments being made in data centre infrastructure in SA in anticipation of increased demand in cloud services will likely continue in 2021.

This is according to market analysts, as SA has seen a flurry of activity in the data centre market this year.

In January, ITWeb reported SA was set to experience a cloud computing “land grab” as more organisations take their workloads to the cloud.

Data centre service providers are also expecting an increase in data traffic as a result of more sub-marine communications cables coming to Africa.

This week, carrier- and cloud-neutral colocation data centre solutions provider Teraco Data Environments announced construction has commenced on a new hyperscale data centre, with 38MW of critical power load, in Ekurhuleni, east of Johannesburg.

Teraco is investing R4 billion in this facility, which it expects will go live in the first quarter of 2022.

Last month, German start-up CloudRadar launched data centre facilities in Johannesburg.

In September, Dimension Data told ITWeb of its plan to imminently launch data centres in SA. Last year saw US-based software giant Microsoft open two data centre regions in SA, becoming the first global provider to deliver cloud services from data centres on the African continent.

In April, Amazon Web Services announced the opening of the AWS Africa (Cape Town) Region.

In March last year, Chinese telecommunications giant Huawei started offering its cloud services in SA. The company is leasing a data centre in Johannesburg from a partner, from where it is deploying localised public cloud services based on local industry policies, customer requirements and partner conditions.

US-based enterprise software company Oracle in September last year also announced plans to launch data centres in SA this year.

Liquid Telecom also reportedly raised $307 million through a rights issue to fund a rapid expansion of its data centre business across Africa.

In May, Africa Data Centres, part of the Liquid Telecom Group, completed the acquisition of a state-of-the-art tier IV data centre in Johannesburg from Standard Bank, Africa’s largest bank.

Creating demand

Commenting on these investments, Derrick Chikanga, an analyst at Africa Analysis, says most companies are aggressively increasing investments in data centre infrastructure in anticipation of increased demand in cloud and hosted services.

He adds the COVID-19 pandemic has resulted in most businesses operating remotely. “This has necessitated the need for both hosting and colocation services, to allow client servers and data to be hosted on third-party facilities.

“With the anticipated continuation in the work-from-home setup by some organisations, demand for data centre services is only expected to continue increasing in the short- to medium-term,” Chikanga says.

“Besides the ongoing expansion work by Teraco and other data centre providers in SA, other providers have also announced plans to set up local facilities in the country, notably Oracle and Opera. The anticipated demand for cloud services will also create demand for data centre services. Hence, most service providers are expected to continue investments in the immediate future,” Chikanga says.

Sabelo Dlamini, senior research and consulting manager at IDC South Africa, says while digital transformation may have been in most companies’ plans, COVID-19 has acted as a key driver.

He points out that data centre companies are making investments after observing that many organisations in SA have embarked on digital transformation initiatives.

“In digital transformation, most enterprises will be adopting artificial intelligence and the Internet of things in their business processes, which requires huge computing and storage resources,” says Dlamini.

“With more players, there will be competition, improved services and more freedom of choice. In addition to monetary benefits, local organisations will benefit from improved processes – workloads that may be taking weeks to process might now be processed in a few hours.”

Meanwhile, Jon Tullett, senior research manager for cloud/IT services at IDC, notes it takes a couple of years to bring a data centre online.

“Timing a build is essentially taking a position on when the market will be in an optimum position to deploy technology into it. COVID-19 recovery is a serendipitous factor in this instance, but it wouldn’t have been the reason for planning the build in the first place; there’s simply a lot of appetite for data centre whitespace as enterprises move on-premises resources into collocated facilities as their infrastructure undergoes digital transformation, and as cloud players from hyperscale to second-tier open up local operations,” says Tullett.

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