Australian data-centre operator NextDC cut its fiscal 2027 outlook after delays to electricity network work at its M3 Melbourne campus pushed contracted capacity further into the future. The company now expects net revenue of A$475 million to A$500 million, down from its previous range of A$615 million to A$640 million. It also reduced underlying EBITDA guidance to A$245 million-A$265 million from A$385 million-A$410 million.

Power delay moves contracted revenue

NextDC said the revised ranges exclude revenue and attributable earnings from affected M3 customer contracts, including capacity that had already begun billing. The company estimated that about A$140 million of contracted revenue would be deferred in the current financial year. Its ASX filing said the next increase in electricity supply to the Melbourne facility is now expected in fiscal 2028, while approval timelines for later expansion stages have also moved back.

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The immediate constraint is not a lack of signed demand. It is the timing of grid capacity and development approvals needed to deliver that demand. Reuters reported that Jemena Electricity Networks suspended parts of the required network work amid community and stakeholder opposition and does not expect to restart before February 2027. The timing shows how physical infrastructure can interrupt the conversion of data-centre order books into revenue even when customers have contracted for capacity.

Investors reprice the expansion risk

NextDC shares closed 41.7% lower on Wednesday, wiping about A$3 billion from the company's market value in its worst trading day since its 2010 listing, according to Reuters. The broader ASX 200 still finished slightly higher, making the company the benchmark's largest decliner. The scale of the selloff reflected both the guidance cut and concern that power, planning and community constraints could affect other data-centre projects.

Management also lowered fiscal 2027 capital-expenditure guidance to A$4.5 billion-A$5 billion from A$5.25 billion-A$5.75 billion. NextDC said it would pause new developments and land acquisitions not supported by customer contracts for the foreseeable future, while considering capital recycling that could include sales of selected development sites. The company plans to present initial findings from its capital review at its annual investor meeting on November 20.

A wider test for AI infrastructure

The update arrives as investors are scrutinising the cost of the infrastructure behind artificial intelligence. Data-centre operators need large amounts of electricity, land and network investment before new capacity can generate revenue. That makes delivery schedules sensitive to grid construction, planning decisions and local opposition. NextDC's experience does not establish that contracted demand has disappeared, but it does show that demand alone cannot remove execution risk.

For NextDC, the next concrete markers are progress on the M3 power connection, treatment of the affected customer contracts and the November capital review. Investors will also look for evidence that capacity at other campuses can be delivered on schedule. Any asset sales or further spending reductions would clarify how management intends to balance committed construction against leverage and liquidity while the Melbourne timeline remains uncertain. Until then, the lowered guidance represents a confirmed reset to the company's near-term earnings path, while the ultimate value of the deferred Melbourne contracts depends on timing and successful completion rather than a new sales forecast.

Sources

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