NextDC pauses uncontracted projects after Melbourne data centre setback
Australian data centre operator NextDC has halted work on all projects without customer contracts following delays and community backlash on its flagship M3 facility in Melbourne. The move comes as rivals Goodman Group and Digital Realty finalised a A$715 million (US$492 million) stake in the compan
SYDNEY – Australian data centre operator NextDC said on Monday it would stop work on all projects without customer contracts, following a major setback on a facility in Melbourne. The decision came as two major rivals, Goodman Group and its New York-listed partner Digital Realty, finalised buying a 9.9 per cent stake in the company for A$715 million (US$492 million).
A suspension of work on the flagship M3 data centre expansion in Melbourne, due to power delays and community backlash, forced the company to cut its earnings forecasts last month, sending its share price tumbling 42 per cent. The decision to pause uncontracted projects is another blow for NextDC, which had been touted as Australia's most prolific data centre developer.
"The last couple of weeks (I) certainly didn't expect to be in the position we're in today having to deal with some delays," NextDC's chief executive, Craig Scroggie, told the UBS Australasia conference. "That's unfortunately probably reflective of the global environment in relation to the engagement, social license, people's feelings about artificial intelligence and data centres being the physical embodiment of that."
Scroggie said the M3 delay meant the top priority was to win community backing for that project, and "anything that didn't have a customer contract and a customer commitment that we absolutely have to deliver on is now no longer a priority." He did not say how many projects would be paused. The company had 11 centres in development or in the planning stages, according to its 2026 annual report.
"That work can't restart until we clearly communicate that we've solved this problem, that we've earned the trust of everybody that's been supporting us, and then we will get back to work," Scroggie added. Goodman and Digital Realty said they had no plans at the moment to launch a takeover offer, but reserved the right to do so, adding they would "look forward to a potential collaboration with the NextDC board and management on the ways and forms in which the parties may help to address the challenges facing the company." Following their share raid, NextDC's share price recovered the ground lost from the earnings writedown.
