The Australian data center operator NextDC reduced its revenue forecast for fiscal year 2027 by A$ 140 million, after delays in the work required to expand power supply to the M3 complex in Melbourne. The announcement, made on October 21, is related to difficulties with electrical infrastructure, resident resistance and pending authorizations.
The company now projects net revenue between A$ 475 million and A$ 500 million, below the previous estimate of A$ 615 million to A$ 640 million. The forecast for adjusted EBITDA, an indicator of operating performance, also fell from A$ 385 million–A$ 410 million to A$ 245 million–A$ 265 million.
The revision provoked a strong reaction on the Australian stock exchange. NextDC shares ended Wednesday's session (21) down 41.7%, erasing approximately A$ 3 billion from its market value, according to Reuters.
CEO Craig Scroggie explained that the affected contracts were removed from the projections until their financial contribution can be estimated reliably. The company emphasized that the capacity remains contracted, although the delivery and billing schedule is undefined.
15-meter poles draw resident opposition
The expansion of power supply depends on work carried out by the distribution company Jemena, which suspended part of the work in September amid community opposition and the absence of local council approval while new consultations are underway.
According to a report by ABC News, residents of Yarraville, a neighborhood near the project, went as far as placing cars and trash bins to block access by the teams responsible for installing power poles approximately 15 meters high.
The structures are part of an expansion of the 66,000-volt network. Residents and local authorities questioned the public consultation held before the interventions.
During an investor presentation, Simon Cooper, development director for the NextDC group, said the company is considering alternatives, including new routes for the poles and the installation of underground cables. The second option, however, does not offer an immediate solution.
Jemena reported that it does not expect to resume work before February 2027. As a result, NextDC expects the next increase in power supply to occur only during its fiscal year 2028, which begins in July 2027.
The project faces another obstacle: authorization for stages 6 and 7 of the expansion still depends on the state government of Victoria. The company now expects a decision only in 2027, after the November state elections.
The delays also create contractual risks. Customer agreements provide for compensation for capacity delivered late or without sufficient power and, under certain circumstances, allow terminations. NextDC is still assessing the application of these clauses.
In response, the operator reduced its investment forecast to A$ 4.5 billion to A$ 5 billion and suspended new development projects and land acquisitions indefinitely. Construction of the server rooms at the existing M3 facilities continues.
The company will present an update on its investment review by the annual shareholders' meeting, scheduled for November 20, 2026.
