NextDC pauses uncontracted projects and cuts guidance after Melbourne delay

what happened

Data-center operator NextDC said on Wednesday it had paused all projects not backed by customer contracts and shifted capital to building capacity already contracted to clients. The company is also weighing whether to declare force majeure under its M3 contracts. Its ASX-listed shares plunged more than 40% in early trade as investors worried about the debt-funded global expansion of data centers serving AI and cloud services, according to The Update's report.

The expansion of the M3 center west of Melbourne has stalled after the local electricity distributor suspended power line upgrades in September over safety concerns and resident opposition. The distributor does not expect to resume work before February. Chief Executive Craig Scroggie told analysts the company has no plans to raise equity and expects to stay compliant with its financial covenants.

NextDC now expects fiscal 2027 revenue of A$475 million to A$500 million, down from August's guidance of A$615 million to A$640 million. Underlying EBITDA guidance was cut to A$245 million to A$265 million from A$385 million to A$410 million.

why it matters

The story highlights risk in the debt-heavy data-center model: higher borrowing costs and doubts about future returns are weighing on listed operators. Local peers AirTrunk and Firmus Grid have already delayed their public offerings, adding pressure on the sector.

market impact

Data-center and AI infrastructure stocks: higher debt costs and project delays weigh on listed operators

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