Ayotunde Coker, CEO, Rack Centre talks to TMT Finance Reporter Thomas Simpson about the company’s investment plans and the wider African datacentre market.
What are the key factors that you see driving growth in the African datacentre space?
Ayotunde Coker (AC): There are a number of growth trackers that are imperative to the industry: firstly, the sharp increase of digitalisation and the subsequent rise in the demand for data.
Secondly, broader penetration, which is also subject to a steep increase. This demand for broadband penetration coincides with the increased demand for data and, ultimately, necessitates the requirement for datacentres, which underpin everything.
It is important to note the scale expansion emanating from certain geographies, South Africa for example, where there is a notable inflexion point. Other notable geographies where we anticipate increased scale are West Africa, Nigeria and Ghana.
And, finally, the paramount shift in the median age of demographics (17-21) that sets the stage for peak data growth and consumption.
What is Rack Centre’s investment strategy? What are your ambitions for growth and expansion?
AC: The Rack Centre design is both sturdy and modular, and we align our growth in a modular fashion to capacity. We have been able to expand in correlation to the increasing demand and our investment strategies have been very efficient. Over the next couple years, we will invest around US$100m in capacity growth, both in our current location – in order to grow to around 3000 racks – and also expand to other areas – with the destination likely to be a francophone country in West Africa.
Rack Centre is highly connected: all the undersea cables that serve the west coast of Africa run directly through our datacentre and we are carrier neutral, allowing us to connect the country.
What are the challenges and opportunities you see as a datacentre provider operating in West Africa?
AC: Power is often the cause of many challenges in the industry; however, because we have always generated our own power, we do not feel its impact. Additionally, we have been working with local electricity companies, not just to plug into the grid, but to design and engineer a dedicated power solution that brings independent lines into rack centre – which will be a first in that kind of scale.
The access to efficient capital is another challenge, as the access is not as streamlined as in Europe or the US. We find ourselves having to outcompete to make up for this ailment, but we are succeeding.
How do you see M&A and consolidation developing over the next few years in your region of operation?
AC: There is a lot of demand for the individual companies to scale up in the regions that we operate in and we intend to be the number one player in West Africa. We aggregate the fibre providers and carrier providers, and carrier relationship management is very important to us. I see the expansion of broadband not just being down to fibre.
There may be some consolidation in the carrier space, but as the growth happens, the key scale players across Africa may be looking at how to build the cross-regional relationships that enable additive competition.
We could also experience a move where emerging Africa majors come out. Because other data centre providers, even the scale in the US, Asia and Europe, are still growing – we are focusing on that.
Moreover, the continent is becoming increasingly connected and this is driving scale and demand.
What industry trends will be the most significant over the next few years?
AC: Cloud services will certainly be a key trend. We envisage them being consumed like tomorrow’s telecommunications: especially by SMEs. It will be like being in a shopping mall and going into whatever shops that you want and paying for things are you want to consume. There will be an emerging mass consumption of cloud services – a mix of both corporate and retail services.
The rise in cloud services will be closely comparable to when mobile phones first hit the masses and suddenly everyone owned one; suddenly people are going to consume cloud services in huge numbers.