Equinix plans to invest US$160-million (R2.8-billion) to build its first data centre in South Africa, as part of the firm’s African expansion push.

The US data centre company will build its first facility in Johannesburg, and expects to be operational by mid-2024, said Equinix Emea president Eugene Bergen in an interview. The deal follows its acquisition of Nigeria’s MainOne, that valued the West African data centre business at $320-million.

“South Africa was a big target for Equinix as it is the most developed economy in sub-Saharan Africa,” said Bergen. “We are focusing to get into Africa, and we are looking at another five or six countries to enter.”

California-based Equinix is looking to take advantage of a predominantly young African population with increasing access to the Internet that is proving a boon for the industry, albeit from a low base.

With the South African deal, the global data centre investor plans to serve large enterprises such as banks, content and media companies, and “hyperscalers” operating in the country and on the continent, said Bergen. The company is seeking anchor customers that it could potentially follow to other African countries, said Bergen. “We expect the customer ramp-up in South Africa to go quite quickly,” he said.

Tech giants such as Amazon Web Services and Microsoft have also invested in data centres in South Africa in recent years as demand for cloud services grows. The continent accounts for just 1% of global data centre capacity, creating a large opportunity for investors that want to tap into the region’s growth potential, while taking on certain operating risks such as an unreliable power supply.

Read: Nasdaq-listed Equinix acquires Nigeria’s MainOne in blockbuster deal

While South Africa is home to the largest electricity supplier on the continent through Eskom, there have been significant power interruptions as it struggles to replace its ageing plants and meet growing power demand. Equinix’s Bergen said energy reliability was a strong focus for the business across its operations, and it takes various steps to ensure a stable supply including building its own power capacity, installing multiple backup generators and making deals with local grids.

Nasdaq-listed Equinix owns 249 data centres and operates in 32 countries. The South African deal comes soon after the company announced plans to expand into Indonesia and Malaysia. — (c) 2022 Bloomberg LP