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Future Outlook of South Africa Hyperscale Data Centre Market: Ken Research

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1.  Hyperscale Data Center Industry in South Africa has expanded at a double-digit growth rate in 2022 and is poised to climb further in 2027.

Data Center Industry in South Africa1

Hyperscale data centre sector in South Africa has grown at a CAGR of ~93% between 2017 and 2022. The surging growth is attributed to the increasing usage of digital and online platforms post-COVID-19. The increasing digital/online usage contributed to the growing demand for data storage capability, server hostage, and enhanced IT networks of enterprises. Social media usage increased from 64% in 2019 to 71% in 2020 due to the complete lockdown of the economy which resulted in the increased consumption of online content. Coupled with that, the increasing internet penetration rate between 2017 and 2022, resulted in heavy internet traffic, positively impacting the hyperscale data centre industry. With this, it is highly expected that the South Africa Hyperscale Data Center Market will grow with over 35% CAGR between 2022 and 2027E.

2. Revenue generated from large-sized hyperscale data centres contributed to the majority share of ~80% to the overall HSDC market in 2022.

Data Center Industry in South Africa2

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The revenue generated from large-sized hyperscale data centres contributed to the majority share of over 80% in 2022 out of the overall revenue generated by the hyperscale data centre industry. Demand for large-sized hyperscale data centre was driven not only by domestic customers, but also by a growing international client base in South Africa, attributed to its strategic geographic location, connecting Europe, APAC, and Middle-Eastern regions. Large-sized hyperscale data centre such as Dimension Data are adapting IaaS solutions to enhance their performance and strengthen their security measures in recent years.

3. Besides, revenue generated from extending network solutions to entities accounted for the highest share of ~40% in 2022.

Data Center Industry in South Africa3

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Revenue generated from extending network solutions to various enterprises occupies the maximum share in 2022 out of the overall revenue generated by the HSDC market. This is attributed to the ability of hyperscale data centres to house large IT networks of firms due to their infrastructural capability and bandwidth to extend a higher number of racks. Further, outsourcing data storage facility assists an enterprise in lowering their capital & operational expenditure costs, which resulted in storage solutions contributing to a 30% revenue share in 2022.

4. Low cost to enterprises and increasing data traffic are expected to enhance the demand for hyperscale data centre facilities in South Africa.

Data Center Industry in South Africa4

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Establishment of hyperscale data centers decreases the total cost of ownership of an enterprise due to optimal hardware infrastructure utilization, effective allocation of system workloads, and process transformation. In addition to this, increased awareness of environmental impacts and the government’s commitment to limit GHG emissions to 350-420 MtCO2e by 2030, is serving as a major growth driver for businesses to adapt to a process in which their data centers are utilizing the least amount of energy while having the least impact on the environment.  Moreover, the increasing internet penetration rate coupled with the rise in active internet users resulted in growing data traffic over the years. Simultaneously, due to increasing traffic, there exists a strong demand for data storage facilities ultimately contributing to the increased adoption of hyperscale data centers in South Africa.

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