TERACO AN AFRICAN STORY THE JOURNEY OF A VENDOR NEUTRAL DATA CENTRE Andrew Owens, Teraco Data Environments For SAFNOG 2018

TERACO CT1 CAPE TOWN: CIRCA 2009 BACKUP GENERATORS DATA CENTRE

TERACO JB3 ISANDO CAMPUS Johannesburg: 2018

2008: WHY THE TIME WAS RIGHT BEFORE 2008 TODAY By 2008 the teleco market in South Africa had reached a pivotal point, resulting in the optimal environment for the establishment of a vendor neutral data centre operator: BEFORE 2008 Single fixed line operator Single operator licensed to build infrastructure High connectivity costs - $4000 per Mbps Large Telco’s not peering Limited subsea capacity (2 cables: SAT3 & SAFE) Limited international content available locally TODAY Over 350 registered ASNs ECNS license holders build out own infrastructure 2 established IXP operators Multiple high capacity subsea cables (EASSy, WACS, SEACOM, SAT3 & SAFE) 6/10 top content providers available locally 6/10 top CDNs available locally LARGEST INTERNET COMPANIES LARGEST GLOBAL PEERS 1 2 3 4 5 6 7 8 9 10 1.) In a historic case defended by Telkom, Altech challenged in court that its Autopage subsidiary-which held a VANS (value added network services) license should be able to build its own infrastructure. The high court ruled in Altech’s favour and, by doing so, ruled against the status quo in South Africa’s telecom markets. 2.) The high court decision meant that all VANS license holders in South Africa, which numbered over 300 at the time , could now ‘self-provide’ or build their own networks. They were no longer obliged to lease backbone capacity from either the country’s two fixed-line operators (Telkom and Neotel), or the three mobile network operators (Vodacom, MTN and Cell C). The Next Generation Network was born. 3.) The providers are licensed by the Independent Communications Authority of South Africa (ICASA) they are issued with individual electronic communications network service (I-ECNS) licenses.  4.) These licenses began being issued in 2008 The old value-added network services (Vans) licenses originally held by all the early providers have been converted to I-ECNS where applicable.

TERACO INVESTMENT TIMELINE 3 SERIES B

GROWTH TIMELINES 4 As CDN operators started deployment (2014-2015) in Africa we saw a huge spike in capacity requirements across all products - power,space,cabling

2,800 INTERCONNECTS 12,500 INTERCONNECTS INTERCONNECTIONS AS AT JUNE 2014 2,800 INTERCONNECTS INTERCONNECTIONS AS AT SEPTEMBER 2018 12,500 INTERCONNECTS 34.5x 3.8x 2.4x 5.2x 3.2x ENTERPRISE CARRIER / ISP CONTENT OUTSOURCER / MSP FSP Customers Carrier / ISP 103 Outsourcer / MSP 34 Enterprise 16 Content 6 Financial Services Provider Total 165 Customers Carrier / ISP 230 Outsourcer / MSP 94 Enterprise 54 Content 22 Financial Services Provider 41 Total 441

Broken down per market GDP our data centre builds and growth have been primarily focused within Johannesburg with Cape Town following and Durban only emerging recently. Therefore be careful on over investment in data centre builds. As a neutral data centre operator our first review is on available networks and through deregulated markets drive carrier growth and therefore as a colocation operator a larger addressable market.

TRENDS DRIVING DC GROWTH IN AFRICA 6 Content is moving closer to the edge (user) Accelerated migration to the Cloud Infrastructure capex Lack of resources (skills) On premise DC cost escalation Access to connectivity Lower connectivity (capacity) costs The Cloud is local Improved security Data sovereignty Lower latencies Emerging market Access to multiple networks Access to peering (NAPAfrica, JINX, etc.) Enterprise is becoming digital eCommerce Online everything

THE CLOUD IS HERE 11 July 2018 Amazon Web Services (AWS) Direct Connect is now live in South Africa and located at Africa’s only vendor neutral data centre, Teraco. AWS Direct Connect enables clients to directly connect to their AWS resources in an AWS region. The service is accessible via a direct cross-connect within Teraco or from the Teraco Cloud Exchange platform in Johannesburg and Cape Town. 2 November 2017 Teraco Data Environments, Africa’s largest neutral data centre, today announced it will be a Microsoft Azure ExpressRoute Connectivity partner, providing clients high performance private network connections to Microsoft Azure and other Microsoft Cloud Services. Teraco will be one of the first companies to offer access to the Microsoft Azure ExpressRoute sites in Africa, when Azure becomes generally available in 2018.

TOP 25 AFRICAN RETAILERS, FY13 REVENUE GROWTH (Y-O-Y) 2018: THE ADVENT OF PUBLIC CLOUD INFRASTRUCTURE 7 WHY ARE THEY HERE? RANK '16 RANK '15 COMPANY INDUSTRY COUNTRY 1 Sonatrach Petroleum Algeria 2 Sonangol Angola 3 4 The Bidvest Group Diversified South Africa Sasol Chemicals 5 Eskom Utilities 6 MTN Group ICT/Telecoms 7 Steinhoff International Holdings Wood and paper 8 ShopRite Holdings Retail 9 10 BidCorp (ex Bidvest Foods) Agribusiness Imperial Holdings TOP 25 AFRICAN RETAILERS, FY13 RETAIL REVENUE RANK NAME OF COMPANY HEADQUARTER COUNTRY CORE RETAIL SEGMENT 2013 REVENUE (US$ MILLION) REVENUE GROWTH (Y-O-Y) FY11-FY13 REVENUE CAGR 1 Shoprite Holdings Ltd South Africa Food and beverage 9 852,50 10,5% 11,1% 2 Massmart Holdings Ltd General merchandise 7 529,90 9,8% 8,7% 3 Pick n Pay Stores Ltd 6 343,30 65,0% 6,8% 4 The SPAR Group Ltd 5 166,70 10,7% 11,5% 5 Woolworths Holdings Ltd Clothing and accessories 3 827,80 12,7% 17,8% 6 The Foschini Group Ltd 1 594,10 13,6% 11,7% 7 Mr Price Group Ltd 1 557,70 15,0% 14,1% 8 Clicks Group Ltd Health and personal care 1 349,70 7,9% 6,7% 9 JD Group Ltd {Steinhoff International Holdings Limited) Furniture and home furnishings 1 141,30 -5,8% 2,5% 10 Truworths International Ltd 1 008,20 7,1% 8,8% Africa is the next emerging market with large revenue opportunities for cloud operators. Especially focused on our growing financial sector. Due to resource + capex constraints uptake on migration into the cloud has been expedited

WHY SOUTH AFRICA 1 Large Addressable Market 2 Internet Freedom 3 8 1 Large Addressable Market 2 Internet Freedom 3 Broadband Penetration 4 Stable Power Infrastructure 5 Favourable Regulatory Environment JHB – CPT = 16ms JHB – London = 155ms JHB – Nairobi = 52ms JHB – Lagos = 168ms London – Nairobi = 135ms London – Lagos = 94ms CPT – London = 128ms CPT – Nairobi = 72ms CPT – Lagos = 151ms 6 Stable Political Climate 7 Stable Economic Climate 8 Geographic Location (Furthest Point South from European Hub)

WHAT DOES THAT MEAN FOR ENTERPRISE BUSINESS? CONSIDER THIS: Are you using or planning to implement some form of cloud? Is the private cloud is a more attractive option than the public cloud? Is your organization moving to the cloud without an adoption strategy in place? Does your firm anticipate reaping great benefits from the cloud? Do you know what the cloud means? Are you planning a hybrid cloud implementation of some sort? Have you reviewed open source? It is an important strategic component for the majority of cloud adopters. Are you going to rely on your current providers for migrating into the cloud? Are you reviewing sophisticated cloud configurations and implementations? Are you concerned about data security? Is multi-cloud a part of your strategy? What are the enterprises currently considering – key opportunity for carriers and managed service providers to become part of the consideration process and drive strategy. This will however require new product development and a focus on keeping Africa routes in Africa and resolving cross border issues.

WHAT ARE CLOUD ON-RAMPS? DEFINITION The dedicated network interconnection point to Cloud Operators e.g. AWS Direct Connect Microsoft Express Route Google Cloud Connect FEATURES Predictable Performance High Throughput Service Level Agreements (SLA) Redundancy

LIVE AFRICA CLOUD ON-RAMP LOCATIONS – More on the way! CT1 | CAPE TOWN Region: South Africa West JB1 | JOHANNESBURG Region: South Africa North Currently on live in South Africa however more to go live in Kenya and Nigeria

EXAMPLE - HOW TO CONNECT FROM TERACO Cloud On-Ramps REGION CORPORATE DATA CENTER Virtual private gateway Client/Partner router CLOUD ON-RAMP LOCATION (TERACO) JB1 | Johannesburg CT1 | Cape Town Teraco Cloud Exchange Client router/firewall Public Cloud Services PRIVATE VIRTUAL INTERFACE PHYSICAL CROSS CONNECT PUBLIC VIRTUAL INTERFACE

THE NEXT 10 YEARS IN AFRICA Vendor neutral DCs will proliferate across the major tech hubs (SA, Nigeria, Kenya) 2 Global tech brands will adopt a local approach to these markets 3 5G accelerates connecting the continent 4 Africa’s informal economy becomes digital 5 Cloud becomes mainstream 6 Corporate/enterprise investment in African technology increases

THANK YOU The world connects here. www.teraco.co.za Teraco Data Environments (Pty) Ltd 5 Brewery Street, Isando, 1600     Phone +27 11 573 2800 / +27 (0) 86 083 7226 www.teraco.co.za