Full Breakdown
NextDC Slashes FY27 Outlook After Power Delays at Melbourne M3 Site
By Drooid · · How we work
Core Event: Earnings Cut and Project Halt
Australian data-centre operator NextDC announced on October 21 that it would cut FY 2027 net-revenue guidance to A$475 million–A$500 million (down from A$615 million–A$640 million) and underlying EBITDA to A$245 million–A$265 million (down from A$385 million–A$410 million). The revision excludes about A$140 million of contracted revenue tied to its flagship M3 facility in West Footscray, Melbourne. The company also placed all new development projects and land acquisitions on hold and reduced FY 2027 capital-expenditure guidance to A$4.5 billion–A$5 billion. Shares fell between 39.5 % and 44 %, wiping roughly A$3 billion from market value in a single session.
Background & Context
NextDC, Australia’s largest listed data-centre developer, has benefited from the AI-driven surge in demand for high-performance computing. Australian data-centre spending is projected to reach A$150 billion by 2030, but growth is limited by the need for reliable, high-capacity electricity. In Melbourne’s west, the aging grid is being asked to support new 66-kV transmission lines for the M3 campus, a process that has encountered local opposition and regulatory delays.
Official Statements & Responses
NextDC told the Australian Securities Exchange that it will not continue work on sites without an existing customer commitment. Jemena Electricity Networks, responsible for the grid upgrade, said the suspension was caused by “community and stakeholder opposition” and that work is unlikely to resume before February 2027, with the next supply increase slated for FY 2028. The Victorian government confirmed that network design and construction remain Jemena’s responsibility and are regulated by the Australian Energy Regulator.
Criticism & Opposition
Local residents and the group Citizens of Tottenham argue the M3 project lacks a social licence. Senator David Pocock proposed a modest 5 % levy on data centres to address community concerns, noting that foreign operators pay little corporate tax despite a projected $200 billion AI-infrastructure investment. Residents have called for remediation and voluntary buy-backs for the disrupted neighbourhood.
On-the-Ground Reports
In September, Yarraville residents blocked Jemena trucks, parked cars in excavation pits and used WhatsApp groups to coordinate protests against the installation of 22-metre-high, 66-kV poles. The poles, capable of carrying 160 times the voltage of existing lines, were to run within 15 metres of homes. Council consent was withheld pending further community consultation, prompting Jemena to pause work.
Conflicting Reports & Gaps
Media outlets differ on the exact share-price decline: Bloomberg cites 42 %, CNBC 39.5 %, Reuters 41.7 %, while other sources mention 44 %. No source provides a definitive post-trade price, leaving the precise market impact ambiguous.
Verbatim Quote
- “We are not going to continue any work on any sites that don’t have an existing customer commitment,” — CEO Craig Scroggie
What’s Next
NextDC will present the initial results of its capital-expenditure review at its annual investor meeting on November 20. The Victorian government’s planning decision on later stages of the M3 expansion is expected in 2027, after the state enters caretaker mode on 3 November ahead of the 28 November election. Jemena’s timetable places the next grid-supply increase in FY 2028, meaning deferred revenue will likely be recognised in the following fiscal year. The company remains compliant with its debt covenants as of the 30 June 2026 test date and expects to stay within limits at the next test on 31 December.