Digital Realty Raises Stake in Teraco to 77% in $688 Million Share Deal
Key Facts
Digital Realty raised its stake in the Teraco joint venture to about 77% from 61%, after acquiring an additional stake of about 16% for about $688 million. The company disclosed the deal in its third-quarter 2026 results, saying it was settled in October. The transaction was completed through the issuance of common shares, making the consideration an equity interest in the company rather than a primarily cash payment. The deal increases Digital Realty’s exposure to Teraco’s data center platform in Africa. It also gives the company a larger share of the colocation and interconnection businesses, whose growth it said supports its global operations.
The transaction stems from a mandatory put option under the agreement with Teraco’s rollover shareholders. Digital Realty said in a filing with the U.S. Securities and Exchange Commission that two shareholders sent a final notice on May 12, 2026, to exercise the option. The notice covered about 16% of Teraco’s total outstanding shares. The deal was therefore a settlement of a previously defined contractual right, not the announcement of a new negotiated purchase in October. The company confirmed that the option exercise was settled in the same month it announced its third-quarter results.
Digital Realty issued 3,425,031 common shares to settle the acquisition. The final number was based on the volume-weighted average share price over the 20 trading days preceding the option exercise date. In a June 2026 announcement, the company had said it expected to issue 3.4 million shares to fund the deal primarily, valuing the stake at about $650 million at the time. The later filing put the value at about $688 million upon completion. The two figures reflect estimates at different stages: an initial announcement before closing, followed by the deal value at settlement.
The additional stake’s significance extends beyond the size of the deal, with Chief Executive Andy Power linking the increased ownership to Teraco’s position in Africa’s data center market. In a June announcement, he said the move “strengthens our position in Africa’s leading data center platform and supports the continued growth of our global colocation and interconnection business.” Investor presentation data showed Teraco’s revenue rose from $174 million in 2022 to $352 million in 2026, based on data through March 31. Over the same comparison period, interconnection points increased from 22,000 to 29,000, while installed capacity rose from 75 to 126 megawatts. Capacity under construction also climbed from 19 to 41 megawatts, illustrating the platform’s expansion and stated operating capacity.
Other operating indicators point to further expansion in the company’s business. Teraco said in January 2026 that it had commissioned three large facilities during 2025 and had 189 megawatts of IT load capacity. It added that it serves more than 700 global and local customers, while noting that it had secured land and power for continued expansion. In August 2025, it announced the completion of an expansion at its JB4 data center, adding 30 megawatts and bringing the site’s IT load capacity to 50 megawatts. Teraco’s chief executive linked the expansion of the management team in January to changing customer requirements related to cloud, artificial intelligence and enterprise workloads.
Those figures are consistent with published forecasts for data center demand growth across the continent, though they are not forecasts specific to Teraco’s performance. A McKinsey analysis published in 2025 said colocation accounts for about a third of demand for African data center services and is expected to maintain its share through 2030. At Digital Realty, Teraco’s noncontrolling share of funds available for distribution was $19.190 million in the quarter ended September 30, 2026, compared with $17.018 million in the same quarter of 2025. The figures show Teraco’s contribution to the related distribution line in the company’s results, alongside the expansion of its operating assets. On October 29, Digital Realty raised its 2026 core funds-from-operations-per-share outlook, excluding net incentive income, to a range of $8.30–$8.35.
The remaining stake remains subject to the agreement’s put and call mechanisms. The put option allows the rollover shareholders to sell all or part of their remaining stake over two years starting February 1, 2026, while the company can buy all or part of the stake over one year beginning February 1, 2028. The price for any stake purchased can be settled in cash, Digital Realty shares or a combination of the two. DLR shares closed at $175.95 on November 2, 2026. The available information does not include the stock’s daily trading range in that session.