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REIT Digital Realty invests $500m in Nigeria’s Medallion Communications, others

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Engr. Ikechukwu Nnamani, President of Medallion Communications

Colocation operator Digital Realty is pushing for larger market share in the African data centre business through the investment round in Nigeria’s Medallion Communications Limited and others on the African Continent.

Thetechcapital.com reported that as the US’ first pure real estate investment trust (REIT) will be present on three countries beating rivals including Equinix, CyrusOne, and CoreSite Realty.
The move has been carried out through the investment in Nigeria’s colocation and interconnection provider Medallion Data Centres through a joint venture with the Pembani Remgro Infrastructure Fund.

Medallion operates two data centres, one in Lagos, the most populous urban metropolitan area in Africa with approximately 15 million people, and one in Abuja, the capital of Nigeria.

Medallion’s Lagos data centre serves as a connectivity hub in Western Africa with over 70 carriers and internet service providers, over 80 per cent of the public peering traffic on the Nigerian Internet Exchange, and a peering point for all subsea cables currently operating in Nigeria with plans to serve as a peering point for the nine new subsea cables scheduled to be in operation in Lagos by 2023.

As part of the transaction, the joint venture is also acquiring a land parcel adjacent to the Lagos data centre to provide near-term expansion capacity.

Medallion’s management team, led by Ikechukwu Nnamani, CEO and co-founder will continue to lead the business.

William Stein, chief executive officer of Digital Realty, said: “Over the next decade, there will be huge opportunity for global businesses to tap into Africa’s expanding internet economy – with predictions that it could reach 5.2 per cent of the continent’s GDP by 2025, contributing nearly $180 billion to its economy (up from $115 billion in 2020).

“By 2050, the internet economy has the potential to contribute $712 billion. Through major investment in the continent’s internet infrastructure, Digital Realty aims to be a core enabler of these economic and quality of life gains.”

He added that there is a huge opportunity to both meet growing customer demand for connectivity in Africa and improve the internet infrastructure that serves over one billion people who do not yet have proper access to the benefits of internet.

“The expansion of our platform announced today is a leap forward but it is just the start of our $500 million commitment to investment in the continent over the next decade,” Stein said. “We see a huge opportunity to underpin Africa’s expanding internet economy and play a central role in its growth.”

With a population of over 200 million, Nigeria is Africa’s most populous country and the seventh most populous in the world.

Its GDP is the largest in Africa and was the 26th largest globally in 2019. With a large and young population, a growing and diversifying economy as well as a maturing regulatory environment, Nigeria has experienced strong economic growth in recent years.

The JV between Digital Realty, which today manages 291 facilities in 47 metros across 24 countries on six continents, and Pembani Remgro Infrastructure Fund, a joint initiative established by Remgro, Phuthuma Nhleko and the investment team, based in Johannesburg, South Africa, is not new.

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