NEXTDC has cut its FY27 net revenue guidance to between $475 million and $500 million, down from a prior range of $615 million to $640 million, ABC News reported, after work on a power upgrade serving its M3 Melbourne data centre was suspended. The company also lowered its underlying EBITDA guidance to $245 million to $265 million, from $385 million to $410 million.
The revised EBITDA range is broadly in line with the $248.8 million NEXTDC reported for FY26. Starting in September, Jemena halted parts of the 66kV line upgrade work serving M3, and subsequently told NEXTDC that a restart was not expected before February 2027. Jemena pointed to safety concerns, blocked site access caused by community and stakeholder opposition, and the local council's refusal, as the relevant road authority, to grant consent pending further community consultation.
Residents in Yarraville blocked Jemena crews in September by leaving cars and bins in the street, preventing the installation of power poles in Sanderson Street. The contested poles are rated to carry up to 66,000 volts, a figure roughly 160 times the voltage of the poles they would replace.
The M3 data centre is located in West Footscray, approximately 10 kilometres west of Melbourne's CBD, and spans 41,000 square metres. The facility sits approximately 15 metres from homes.
NEXTDC now expects the next increase in grid supply for M3 to occur during FY28, deferring the delivery and billing of affected contracted capacity until then. CEO and managing director Craig Scroggie said the affected M3 contracts had been stripped from FY27 guidance because neither the timing nor the scale of their contribution could be reliably estimated, adding that the capacity remained under contract, that hall construction was ongoing, and that the company was coordinating with both the customer and Jemena on advancing power delivery. The unnamed M3 customer holds contractual entitlements to credits where capacity arrives late or is not fully powered, and under certain conditions also holds termination rights.
NEXTDC cautioned that service level credits on the affected M3 contracts could drag underlying EBITDA below the revised guidance range. The company is examining whether force majeure or other relevant contract provisions provide it with relief. Group chief development officer Simon Cooper told investors the company was examining every avenue, including alternative pole locations and undergrounding electrical cables, while acknowledging that undergrounding was not immediately workable but remained under active consideration.
Citizens of Tottenham president Jacqui Glover welcomed the delays to M3, calling it a significant moment for the area and a reminder that residents beside such developments could not simply be pushed aside. Luke Laretive, CEO of Seneca Financial Solutions, questioned whether data centre operators, despite facing strong demand, were able to build facilities in locations that had access to power, water, supportive communities and proximity to customers.
NEXTDC froze all new development projects and land acquisitions indefinitely and removed all material discretionary capital expenditure. The board will examine capital recycling options, among them selling development sites not needed in the near term.
Scroggie said that because M3 revenue had been deferred, projects without customer contract backing had been paused and the freed capital redirected to capacity customers had already contracted. The unnamed major M3 customer retains rights to claim service level credits and, in some circumstances, to terminate contracts, creating ongoing financial uncertainty for NEXTDC beyond the revised guidance range.
Reporting: SBS News, Business News Australia, ABC News
Written by Pick & Scroll News from the reporting and documents linked above.
