Ex-Storm investors in data centre deal

A number of former Storm investors and management are behind Teraco Data Environments, the company that last month finalised the first tranche of R100 million needed to build two data centres.

Teraco aims to be the first co-location data centre company in SA. This means any business that needs secure data storage can use it without being locked in to specific hardware or telecommunication vendor`s services.

The first centre will be located in the Great Westerford building, in the Cape Town southern suburb of Rondebosch, while the Johannesburg location is still to be finalised.

The Cape Town centre is due to open in January 2009 and the initial funding tranche of R47 million will be used to equip it. The balance of the funding to be raised will go to completing the Johannesburg centre, which is planned to be operational by the middle of next year.

The Cape Town site will have 228 cabinets, in which any range of storage devices can be located. The access switches will be Summit Series 24 port wire-speed gigabit and Ethernet switches with redundant power supply.

Power will be through two independent grids to the municipal supply, supplemented by three generators and three uninterruptible power supplies. Air-conditioning and fire suppression systems will also be installed. Security is planned to be extremely tight, using CCTV and biometric systems.

Teraco claims to be the first South African commercial data centre that will have ISO 2007 certification - the International Standards Organisation`s customer satisfaction code.

Xhead = British backing

Sixty percent of the initial funding comes from overseas investors, who include wealthy British businessman Sir Peter Michael`s Pentangle Group, which was a major backer of telecommunications utility Storm. Vox Telecom bought Storm for R360 million in November.

Other investors include one of Storm`s founders, Tim Parsonson; former Storm COO Lex van Wyk, who is now the MD of the new company; Johann Botha, a director of wireless network provider Frogfoot; and Matthew Tagg, MD of ISP Web Africa.

Treacle, a black economic empowerment investment company, is also a shareholder.

Van Wyk says Teraco has been soliciting investors since February last year.

“We were oversubscribed for our first round of financing and actually had to turn people down. However, some of those investors and the initial investors are ready to put in money for the second round.”

Van Wyk says the recent electricity crisis posed both an opportunity and threat for the new firm.

“Many companies have since realised that managing their own data centres is not their core business and it is better to outsource that to someone else who carries the burden of ensuring power and security. And that is our problem.”

Van Wyk notes that the model is based on similar data centres found in Europe and the US, which offer real estate to store data and allow customers to use whatever technology and connectivity services they get from any vendor.

Xhead = Buy twice

The reason for such a large financing arrangement is that everything has to be bought twice to ensure proper redundancy, he adds.

Parsonson says, as far as he is concerned, this is the first “telecoms-agnostic” data centre to be built in the country.

“As far as I can tell, all other data centres belong to one of the telecommunications-type companies and these facilities are sold with their services. We don`t care what telecommunications services are used,” he comments.

Botha says the data centre has become a marketplace in its own right.

“Companies will use the facilities and interact with each other there. The funny thing is that this is more of a property business than an ICT business.”