NextDC has paused all projects without customer contracts following a major setback at its M3 data centre in Melbourne that forced the company to slash its revenue guidance from A$615m - A$640m to A$475m - A$500m, the chief executive said at the UBS Australasia conference. The share price fell 42% after the earnings downgrade.
The M3 expansion was delayed after electricity provider Jemena suspended work on new 22-metre power poles needed to supply increased power to the site, following community and stakeholder opposition and safety concerns about access. The delay pushed the M3 expansion out to FY28, CNA reported. NextDC's 2026 annual report showed 11 centres either under development or at planning stage.
Chief executive Craig Scroggie said the past couple of weeks had not gone as expected and that the situation reflected a broader global environment around community attitudes toward artificial intelligence and data centres. Winning community support for M3 was now the top priority, he said, and work on paused projects could not resume until the company had clearly communicated that it had resolved the problem and re-earned the trust of its supporters. He did not specify how many projects would be paused.
Goodman Group and Digital Realty together took a 9.9% stake in NextDC valued at A$715m following the share price collapse, clawing back the losses. The two companies said they were open to working with the NextDC board and management to help tackle its current difficulties, though they had no current plans to launch a takeover offer.
Businesses planning to use future NextDC data centre capacity from uncontracted developments face an indefinite wait, while companies that have contracted capacity are still expected to receive their deliveries.
Reporting: CNA
Background: The Guardian, The Motley Fool Australia
Written by Pick & Scroll News from the reporting and documents linked above.
