Telcos up data centre investment on 500% internet usage surge

Telecommunication firms are committing funds to build more data centers to meet increased internet consumption and storage in the country.

Since 2019, the country’s average monthly internet consumption has soared by 502 percent, according to data from the Nigerian Communication Commission (NCC).

Monthly internet usage grew from 125,149.86 terabytes (TB) in December 2019 to 753,388.77 TB in March 2024, says the NCC.

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This surge has been fuelled by the growing appetite for streaming services and other online activities. To support this growth, MTN Nigeria and Airtel, who control 66.28 percent of the country’s mobile subscriber base, have begun constructing new data centres.

According to Mohammed Rufai, MTN’s chief technical officer, the increased data capacity will enable telcos to handle spikes in demand and provide better quality of service. “With sufficient headroom, we can cater to growth and sudden demand rise, ensuring a seamless experience for our subscribers,” he said.

In March 2024, Airtel broke ground on its first data centre in Lagos, Nigeria. The Nxtra by Airtel data will be the first of five hyper-scale data centres to be developed by Airtel Africa to improve the speed of access to digital services and the cost of managing data. The centre will help customers meet data sovereignty requirements and enable more local cloud services.

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In June, MTN Nigeria announced it was building a 1,500-rack, Tier 4 data centre to play a pivotal role in meeting the growing data demands and digital needs of businesses and consumers in the country. “Our facility will provide the space and services needed, enabling companies to digitalise their operations and improve efficiency,” Rufai, earlier quoted, said.

These investments in new data centres and existing ones will improve the country’s position as a key driver of the digital economy.

Bosun Tijani, communications, innovation and digital economy minister, said, “Data is a key driver in our economy. Not only do we need to connect our people, we also must invest in the digital economy, and through the investment that companies like Airtel have made in our economy, we are fully able to participate in the digital economy.”

Data centres are critical infrastructures for modern businesses and governments, providing secure and reliable digital data storage, processing, and management. Despite this, Nigeria has fewer data centres than other African countries such as South Africa and Kenya – in terms of the number and quality of data centres available.

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In recent years, South Africa has attracted data centre investments from big tech companies like Google, Amazon, Microsoft, and Oracle. A report from Africa Data Centres revealed that South Africa will account for the bulk of the $5 billion investment expected to enter the African data centre market by 2026, with Nigeria predicted to secure $3.1 billion.

According to a report by Arizton Advisory and Intelligence, Nigeria’s data centre market was valued at $230 million in 2022 and is expected to reach $415 million by 2028.

Nigeria has about 12 data centres with popular names like Rack Centre, Main One, Open Access Data Centres, and MTN. However, industry experts say this is insufficient as the sector has at least a $600 million data center gap.

Ayotunde Coker, chief executive officer of Open Access Data Centers (OADC), recently stated, “We do not have enough data centres. Xalam Analytics shows that Africa has 1 percent of the global digital infrastructure while having 17 percent of the world’s population and 4 percent of the global GDP.

“According to our analysis at the Africa Data Centres Association, which I chair, there are about 100 data centres of reasonable scale. While there are some hyperscale data centres in Africa, Nigeria still doesn’t have one yet. However, we expect significant progress in the next 12 months, with new data centres being launched.”

Hyperscale data centres are designed to support very large-scale IT infrastructure. According to Synergy Research Group, about 700 hyperscale data centres exist. South Africa built its first hyperscale data centre about seven years ago. When completed, Airtel’s new data centre will be the first hyperscale in the country.

Coker noted that the country and the continent need to increase their digital infrastructure 10-fold to meet demand. “We must build numerous data centres to bring data storage and processing closer to Africa, driving consumption and transforming lives and businesses. Our current infrastructure is vastly insufficient. Analysis shows we need around 700 data centres but only have about 100,” he said.

Innocent Itsukwi, general manager, Data Center Operations (West Africa), MainOne, stated: “Investments in data centres have been growing, but there’s room for more to meet the increasing demand—but that is not to say existing data centre capacity is sold out, and there is more in development.”

Building more data centres in the country will also localise more content from international companies like Meta and Google, protecting the country from outages like the one experienced in early 2024 when multiple undersea cable breaks disrupted Internet connectivity in Nigeria and several West African countries.

According to analysts, this will significantly boost user experience and network efficiency. These centres will also contribute significantly to economic growth.

The rising investments in data centres will make Lagos a key hub of digital infrastructure on the continent.

“Lagos is going to be the key hub of digital infrastructure in Africa. Right now, South Africa has 50 percent of installed data centre capacity, but Lagos is starting to shift in the implementation of digital infrastructure,” Coker of OADC further said at BusinessDay CEO Forum held on Thursday.