Reviewed the growth strategy, operational set-up and business plan of a company that aimed to become a leading data-centre platform in Africa

The problem

• A long-distance connectivity player acquired an existing data-centre company to use it as a platform to expand its co-location and hosting business across Africa
• The company and its potential investors jointly hired Analysys Mason as an independent adviser to review the growth strategy, the operational set-up and later the business plan prepared by management, with a view to increasing the robustness of the plan and raising fresh capital/financing

The solution

• We assessed the growth strategy by looking at different aspects of the business:
  • demand and competitive dynamics in the markets that were selected by management for the initial expansion
  • review of the positioning within the technology stack and in the value chain (incl. channel strategy) and whether this could support the growth expected in the business plan
• The business plan review was supported by a market sizing exercise for each market where the company planned to establish a data centre, to calculate an implied market share (of both data-centre space and revenue)
• The Analysys Mason technical team also reviewed the design of the data-centre facilities to validate the initial build-up capex and the investment required for future expansion to validate the capex projections in the business plan

Figure: Percentage of data-centre space outsourced (% of total market)

The result

• Our report was presented to the Board and was used to inform decisions related to the company’s data-centre strategy
• The client used our findings to fine-tune its business plan, while the investors used the due diligence material to develop their own valuation model and support the discussions with their investment committees