THE AFRICAN DATA CENTER RISES

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Dakar – London - Cambridge

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THE AFRICAN DATA CENTER RISES

Data Center Colocation Demand, Supply, Forecasts &

Business Models in African Markets

A XALAM ANALYTICS SPOTLIGHT REPORT

REPORT TABLE OF CONTENTS

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welcome all feedback on our research. Please email feedback to: [email protected]

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REPORT OVERVIEW

3 Every so often, a product sees a multiplicity of factors combine, as if coordinated, to create a groundswell of demand for it so strong that it turns into a

near-tsunami, only held back by the supply side’s inability to keep up with it. Our analysis of the African multi-tenant colocation data center market suggests a

market in such a stage, at the onset of a phase of accelerated growth driven by factors ranging from rising demand for cloud and server virtualization services

to booming media content markets, regulatory pressures to “repatriate” hosting of African content, and substantially improved metro fiber infrastructure.

The African Data Center Rises: Colocation Demand, Supply, Forecasts & Business Models, provides one of the most comprehensive research currently

available on the African data center market. The report offers in-depth qualitative and quantitative analysis of demand for data center services in sub-Saharan

Africa, along with estimates and projections of available white space supply, analysis of the collocation business model and profiles of key African collocation

providers. The report offers insights on data center service provisioning in a context of distressingly deficient power infrastructure and provides profiles of key

African colocation market players, their estimated share, business models and overall outlook. In addition, the report analyzes data center demand in key

economic centers such as Johannesburg, Cape Town, Lagos and Nairobi, and further identifies Accra, Dar es Salaam, Ibadan and Port Harcourt as offering the

next best data center opportunities in the region.

Sample findings of The African Data Center Rises: Colocation Demand, Supply, Forecasts & Business Models include the following:

African colocation demand is rising two to three times faster than supply – those curves nonetheless have different shapes (continuous line vs. staircase),

leading to markets that alternate between phases of colocation space supply deficit and surplus as demand catches up to supply and vice versa.

The African data center market is critical to the integration of the continent into global networks –Hyperscale and Internet cloud players, such as Amazon

Web Services, Microsoft (Azure) and Google have global cloud services built upon an extensive network of self-built data centers, but lack Africa-based data

centers, creating latency issues and hampering the growth of their cloud offerings in the region.

In assessing the three main elements of colo pricing – rack space, power and connectivity, we find that more than power, the cost of connectivity is currently

the fulcrum of the colocation price structure in Africa. Fiber connectivity market structure and pricing is a critical hurdle to colo growth in Nigeria, and the

single most critical obstacle to the establishment of an independent colo market in an otherwise compelling Tanzanian market.

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THE AFRICAN DATA CENTER COLOCATION MARKET – SOME HIGHLIGHTS

4 Average Data Traffic Rising

by ~100% a year in key

African Markets

Power Grid as the Primary

Source of Power Remains The

Predominant Setup – but 90%

Use Diesel as Primary or

Back-Up

Metro Fiber More Available in

Business Districts – If not

Necessarily Cheap

~$550m Colo Market –

Projected to Triple in Size

by 2020

SSA Colo Supply 7x smaller

than London Colo Supply

Hyperscale Cloud Players (AWS

EC2, Google, Azure) Need

Africa Presence but Conditions

Not Good Enough to build

Own DC

~1m liters of diesel in

generators or reserve

tanks

~150 MT Data Centers – but

only ~12 certified Tier III or

Tier IV

Colo Market is Ripe for Consolidation Across the Value

Chain

Only 5-10% of Addressable

Data Center Market Uses

Colocation Services

Strong Movement to Bring Content (and therefore Hosting) Closer to Customers

Colo DC utilization levels

varying from 30% to as

much as 80%

Acceleration of Demand for

Cloud Services

Cost of Connectivity

_{Dominates Colo}

Pricing Structure

500K to 600k of Total

Data Center Space

Johannesburg, Cape Town,

Lagos, Nairobi: 90% of

available colo white space in

SSA

Colo Demand Rising Faster

_{than Colo Supply}

SSA Aggregate Colo Power

Load at about 50 MW

High PUEs

Dar es Salam, Ibadan,

Accra can be African

Colo Next Big Thing

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5 Key Customers of African Colocation Services - 2015

E-COMMERCE, TECH START-UPS MEDIA CONTENT PLAYERS FINANCIALS/BANKS INTERNATIONAL NETWORK CARRIERS CLOUD, IT SERVICES

PROVIDERS & ISPs CDNs & INTERNET PLAYERS

KAYMU, JUMIA, KONGA, ANGANI IROKO, SHOWMAX, VIDI, RTI, TULUNKULU ZENITH BANK, STANDARD BANK, BARCLAYS, EQUITY, FIRSTBANK, etc. LEVEL 3, BT, PCCW, CHINA TELECOM, TATA COMMUNICATIONS PAMOJA, ANGANI SPECTRANET, AFRIHOST, RSAWEB, SIMBANET GOOGLE, AWS, MICROSOFT, AKAMAI, LIMELIGHT, CLOUDFLARE, CDNETWORKS

RETAIL

WHOLESALE

~25%-30% of Colo Revenues

~75%-80%+ of Colo Revenues

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6 Key Customers of African Colocation Services - 2015

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EXECUTIVE SUMMARY: THE AFRICAN DATA CENTER RISES SECTION I: AFRICAN COLOCATION MARKET: THE DEMAND CASE

1.1 Drivers of African Colo Demand – From Cloud to Epileptic Power Supply, They are Plentiful 1.1.1 Connectivity: Need More, But It’s Better

1.1.2 From Financials to Media and Cloud Players, an Expanded Addressable Market 1.1.3 International Players: Fitting Africa into “Global” Networks

1.1.4 Others: Cloud, Virtualisation, Managed Services, Regulation

1.2 Breaking Down the Nature of Demand – Wholesale First. Retail? Later, Maybe. 1.3 Sizing Up the African Data Center Colo TAM

1.3.1 Some Market Sizing Parameters

1.3.2 Three Types of Colo Demand: From Addressable to Potential to “Real” Demand 1.3.3 The Demand Curve: 60% to 90% of Potential Demand Is Not Yet Addressed SECTION II AFRICAN COLOCATION MARKET: THE SUPPLY SIDE

2.1 The African Colocation Market: Supply Overview & Colo White Space Projections 2.1.1 African Colocation White Space Supply Bursting at the Seams

2.1.2 Key Colo Hot Spots and Tier Certification 2.1.3 Africa Colo Supply Outlook: Strong

2.2 African Colocation Market Structure: Carrier Neutral Plays, Fibercos, Telcos and Everybody Else 2.2.1 African Colo Market Structure: From Server Rooms to Data Centers

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SECTION II AFRICAN COLOCATION MARKET: THE SUPPLY SIDE

2.3 Who’s Got the Power? African Colo Data Centers and the Power Infrastructure Headache 2.3.1 The Exploding Demand for Data Center Power

2.3.2 How They Do It: African Data Centers Sources of Power

2.3.3 How They Do It: Diesel or Bust, High PUEs and Other Implications 2.4 African Colo Pricing: Looking for Equilibrium – Or Not

2.4.1 African Colo Pricing: (Not) Looking for the Supply-Demand Equilibrium

2.4.2 African Colo Pricing: Outside of SA, Not Exactly Compelling for Retail Customers SECTION III SUPPLY DEMAND GAPS, HOTSPOTS AND REVENUE PROJECTIONS 3.1 Supply/Demand Gap Analysis: of Surpluses and Deficits

3.2 From Dar es Salaam to Ibadan: Looking for Other Potential DC Hotspots 3.3 African Colocation Market Revenue Projections: Tracking Towards the Billion

SECTION IV AFRICAN COLO PLAYER REVIEW, POSITIONING & BUSINESS MODEL EVOLUTION 4.1 African Colo Player Strategic Evolution: Where they Are, Where They’re Going

4.1.1 Strategic Evolution – Tier 1 Access Carriers

4.1.2 Strategic Evolution – Carrier Neutral Colocation Pure Plays 4.1.3 Strategic Evolution – IT, Cloud Service Providers & ISPs 4.1.4 Strategic Evolution – Fiber Companies

4.2 African Colo Key Player Review: From Teraco to MDI-X and Rack Center SECTION V KEY MARKET ANALYSIS: JOHANNESBURG & LAGOS

5.1 Appendix: Supply Demand Gaps and Key Player Analysis in the Johannesburg Market 5.2 Appendix: Supply Demand Gaps and Key Player Analysis in the Lagos Market

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LIST OF EXHIBITS

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SECTION I: AFRICAN COLOCATION MARKET: THE DEMAND CASE Snapshot of Key Drivers of African Data Center Colo Demand Evolution of Africa 3G and 4G Subscription Base*

Key Customers of African Colocation Services - 2015 Strategic Options Available to African Colocation Customers Key African Colocation Demand Curves

SECTION II AFRICAN COLOCATION MARKET: THE SUPPLY SIDE

A Mapping of Sub-Saharan Africa’s Data Center White Space Capacity – Square Meters - 2015 Uptime Institute Tier Certification Definitions

Evolution of Africa Colocation White Space Supply – Square Meters - 2010E – 2015E Evolution of Africa Colocation Power Supply – MW - 2010E – 2015E

How African Colocation Supply Compares vs. London & Frankfurt – Power - 2015 How African Colocation Supply Compares vs. London & Frankfurt – White Space - 2015 Evolution of Africa Colocation Supply by Key Market – 2010E – 2015E

Market Contribution to Africa Colocation Supply – Sq. m - 2015E Table – Africa Tier III & Tier IV Certified DCs*

Africa Colocation White Space by Key Market - 2015

Africa Colocation Data Center Power Load by Key Market - 2015 Africa Colocation White Space – Five Year Projections*

Africa New Data Centers – Sample Projects & Plans – Indicative Only A Structural Overview of the African Data Center Market

Electric Power Demand vs. Power Supply in Sample African Markets

How Africa Compares – Sample Indicative Data Center Power Usage Effectiveness (PUE) Indicators Africa Colocation Data Center Power Load Projections* 2010-2020

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LIST OF EXHIBITS

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DC Colocation, Connectivity and Power Monthly Recurring Rates Benchmarks in Sample Markets* DC Colocation, Connectivity and Power Installation Rates Benchmarks in Sample Markets* DC Colocation, Connectivity and Power Contribution to Overall Pricing in Sample Markets Monthly Recurring DC Power Cost per kW in Sample Markets

SECTION III SUPPLY DEMAND GAPS, HOTSPOTS AND REVENUE PROJECTIONS Colocation White Space Adoption in Sample African Markets - 2015

Colocation White Space Utilization Rates in Sample African Markets – 2015 Proportion of Potential Colo Market that is NOT Served - 2015

Colocation Demand* vs. Supply CAGR in Sample African Markets – 2015-2020

From Ibadan to Cape Town: Where Markets Stand in the Colocation Demand vs. Supply Curves Evolution of Colocation Supply Surplus and Deficit in Key African Markets – 2013 – 2020* Top City/Regional Economic Centers in Sub-Saharan Africa by GDP

Key City/Region GDP vs. Colo White Space Matrix

Where’s the Best? Benchmarking of Top City/Regional Economic Centers in Sub-Saharan Africa: From Power to Cheap Metro Fiber Availability Looking for the Next Data Center Opportunity: Benchmarking of Africa ‘s Key Economic Centers

Africa Colocation Revenue Forecasts by Key Market – 2015-2020 Connectivity Contribution to Colo Revenue in Sample Markets - 2015 Colocation Revenue CAGR by Key African Market – 2015-2020

SECTION IV AFRICAN COLO PLAYER REVIEW, POSITIONING & BUSINESS MODEL EVOLUTION Where They’re Coming From, Where They’re Going – How Colocation Fits in Key Players’ Portfolios Tier 1 Carriers – Share of Data Center White Space in Sample African Markets - 2015

Carrier Neutral Pure Play Colo – Share of Data Center White Space in Sample African Markets - 2015 IT/Cloud Service Providers and ISPs – Share of Data Center White Space in African Sample Markets - 2015 Fiber Companies – Share of Data Center White Space in Sample African Markets - 2015

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COMPANIES MENTIONED IN THIS REPORT

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Akamai Kooba Net One Group

Amazon Web Services Level 3 Pamoja

Angani Limelight Rack Africa

Broadbased Communications Liquid Telecom Rack Center Nigeria

BT Microsoft Seacom

Business Connexion South Africa MTN Business Standard Bank Cloudflare Neotel Tata Communications

CWG Net One Group Telkom SA

East Africa Data Center (EADC) Pamoja Teraco

Equinix Rack Africa T-Systems

Eskom Rack Center Nigeria Vodacom Business Facebook Kooba West Africa Data Center

Google Level 3

Internet Solutions (IS) Limelight Jumia Liquid Telecom

Kaymu Microsoft

Konga MTN Business

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REPORT SPECIFICATIONS

13 Report in PDF format*

~105 Pages

~50 supporting Exhibits and Charts

20-slide Executive summary in PPT

format for quick consumption

Enterprise License

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