Equinix acquires MainOne for $320 million
US digital infrastructure company, Equinix, today has announced the acquisition of MainOne Cable Company, an African broadband infrastructure company that provides innovative telecommunications services and network solutions across West Africa, , along with all its assets, for $320 million. The African data center and connectivity solutions provider launched in 2010 and has become renowned for its top-notch services in the telecommunications space, as well as building what is regarded as West Africa’s first privately-owned open access undersea high capacity cable submarine.
In a statement to the press, the company stated that through this acquisition, Equinix is vantaged to make a pivotal entry into the African market, of which Nigeria and Ghana occupy a relatively large share. Equinix, a Fortune 500 company, is held as one of the biggest digital infrastructure companies on the globe. Prior to now, the company has made significant moves and investments in the Middle East, MENA, India, and Canada, acquiring data centers and expanding across these geographical markets. Through significant partnerships and acquisitions, the company has been deepening its reach across wide and versatile market areas. The company has over 237 data centers across 65 metros and 27 countries globally. Its entry into Africa through MainOne is timely, especially as Africa climaxes in investment growth with over $4 billion drawn into the continent this year.
MainOne’s growth over the years
With over $200 million in equity and debt investments, MainOne has stamped its presence across the African map, especially with the cable submarine project, and the 7,000 km cable from Portugal to West Africa, with stops along Accra in Ghana, Dakar in Senegal, Abidjan in Ivory Coast, and Lagos in Nigeria. the company also boasts of over 1,200 km of a terrestrial fiber network that runs across Southern Nigeria, through Lagos, Edo, and Ogun states.
The company had started under the grit and tenacity of Funke Opeke, who utilized her savings to drive the startup forward in growth. In 2008, Main Street Technologies awarded a turnkey supply contract for the MainOne Cable System to Tyco Telecommunications, which preceded the launch of the company in 2010. From 2015, the company began its operations of MDXi, Nigeria’s largest Tier III Data Center, and put through a submarine cable from Lagos to Cameroon. The company has three data centers with an additional data facility to be opened in the first quarter of 2022.
Over the years, the company has been backed by influential investors such as the Africa Finance Corporation, the Pan-African Infrastructure Development Fund (PAIDF), and financial institutions in Nigeria. In its growth, the company has, however, experienced various challenges. In 2018, their services suffered a 74-minute outage that resulted during a network upgrade rerouting Google global traffic through China. These glitches attracted a lot of public censures, but these had been put to rest.
The company has also been intent on weathering the storms of remaining profitable, as an interview with Nairametrics in 2017 shows. While there were significant growth spikes in revenue and profit before tax in previous years, these successes took a hard hit with the effects of the pandemic. The fluctuating forex rates and foreign debt obligations put a heavy burden on managing the company’s finances.
Equinix-MainOne acquisition: A win-win for all
Through this acquisition, Equinix is best poised to break into the African market via a strong channel of entry. By its acquisition, Equinix will be gaining about 64,000 gross square feet space, in addition to an available 570,000 gross square feet for future projects and expansion. It also affords the American company the opportunity to leverage on existing partnerships in Africa by MainOne, with key technological giants like Apple, Amazon, Microsoft, Facebook and Google. As Charles Meyers, the president and CEO of Equinix makes in a statement,
The acquisition of MainOne will represent a critical point of entry for Platform Equinix into the expansive and rapidly growing African market. MainOne’s leading interconnection position and experienced management team represent critical assets in our aspirations to be the leading neutral provider of digital infrastructure in Africa. MainOne’s infrastructure, customer relationships, partner ecosystem, and operating capability will extend the reach of Platform Equinix and bolster opportunities for customers in Africa and throughout the world.
The management of Equinix has confirmed that Funke Opeke, CEO of MainOne, will still retain her respective role in the new face of the company, after acquisition talks have been finalized in January 2022. Remarking on the acquisition, she says,
With similar values and culture to what we have jointly built, in twelve years, Equinix is the preferred partner for our growth journey. The MainOne team is excited about the partnership created through the acquisition, and we look forward to building our next chapter together.
Acquisitions in Africa
As the year grinds down slowly to a close, it is critical to reflect on the gains and successes of this year, as well as the downsides. Africa, while drawing in a lot of investment in startups, and technology, has also witnessed a significant number of acquisitions. Reports by The BFT Online show that mergers and acquisitions worth over $52 billion were completed in South Africa in the first half of this year. Flutterwave’s recent acquisition of Disha, a content creation platform, also highlights how this trend is growing in Africa’s business scene. A report by BCG this year, shows that in spite of Africa’s challenging business environment, African-led acquisitions are increasing, more Africa-focused private equity (PE) investors are emerging, technology startups are attracting multiple investors, and Africa is becoming more integrated at regional levels.
What these tell of the African market is how attractive the business environment especially in technologically-driven sectors appears to the global ecosystem. As investors are finding interest in staking their capital in favor of Africa’s growth opportunities, top-performing companies in the global arena, are likewise identifying opportunities. Their growth strategies, through acquisitions of competitive business leaders, show forth their enthusiasm and interest in the African market.
This is good news for Africa, as, like a ripple effect, acquisitions will only generate more acquisitions. Relevantly, the African market will also benefit in terms of an increase in internet penetration by this entry of Equinix. With its broad connectivity across many parts of the globe, internet penetration in Africa should spike up in coming years, beyond the average of 50% at which it stands currently. What this implies is that as innovation continues to grow, supported by growth capital, a deeper internet penetration exposes newer sections of the market that can be easily captured by tech-driven startups on the continent.
Africa’s growth this year, especially in the startup space has been phenomenal. The signs show that this Cambrian moment of growth will only spiral and amplify. As such, we expect more acquisitions to follow, and Africa’s market to become increasingly more attractive and competitive. Interesting times ahead, without a doubt.