NextDC cut its fiscal 2027 forecast on October 21 after the utility building the grid connection for its M3 data center in Melbourne suspended the work. Bloomberg reported the shares fell 44%, wiping out about A$2 billion of market value.
Underlying EBITDA guidance fell to A$245 million to A$265 million, from A$385 million to A$410 million, per The Motley Fool Australia. Net revenue guidance fell to A$475 million to A$500 million, from A$615 million to A$640 million. About A$140 million of each came from M3 contracts that are now out of the forecast until NextDC can say when power arrives.
The problem is a power line.
The network operator, Jemena, suspended parts of the works citing community and stakeholder opposition and the lack of local council consent. Its current estimate puts the next supply increase in fiscal 2028. Nothing firmer was given. Planning decisions on the next two M3 stages are expected only after Victoria's state election in November.
NextDC is pausing projects without customer contracts, cut its capital spending guidance to A$4.5 billion to A$5 billion from A$5.25 billion to A$5.75 billion, and may sell development sites it doesn't need soon. It had A$8.7 billion of liquidity on September 30 and says it meets its debt covenants. Another Australian builder, Firmus, pulled its float earlier this month, as we reported.
Bottom Line
A data center is only as far along as its power connection, and a local council can stall the connection. Before signing for colocation capacity with a date attached, ask the provider where its grid upgrade stands and who still has to approve it.