Nextdc shares sink on M3 Melbourne power delay

Nextdc Ltd.’s share price fell as much as 44% in early trading after the company warned of delays to power supply for its M3 Melbourne data centre and cut its financial outlook. The announcement followed an ASX trading halt that began on October 19 while the company prepared a material update on the situation. Trading resumed when Nextdc released revised guidance for the 2027 financial year on October 21.

The sharp market reaction reflected investor concern over the impact of the delay on contracted capacity at the key Melbourne campus and the company’s near‑term earnings profile. The update centred on power network works required to expand the site’s grid supply and the knock‑on effect on customer contracts and development plans.

Nextdc cut its FY27 underlying EBITDA guidance to a range of A$245 million to A$265 million, compared with its previous range of A$385 million to A$410 million. The revision reflects the expected timing of increased grid power availability at the M3 Melbourne facility and the removal of affected contracts from current‑year projections.

Alongside the earnings downgrade, the company reduced its FY27 capital expenditure guidance to A$4.5 billion to A$5.0 billion. Management said capital will be refocused on delivering already contracted customer capacity rather than expanding into new sites or additional land.

The disruption to Nextdc’s plans stems from the suspension of parts of the 66kV network augmentation required to lift grid supply to M3. Electricity distributor Jemena halted segments of these works, citing community and stakeholder opposition as well as the absence of local council consent for the affected sections.

Jemena has indicated it does not expect the suspended works to recommence before February 2027. As a result, Nextdc now expects the next increase in grid supply to the M3 campus to occur in the 2028 financial year. This revised timeline directly informs the company’s updated earnings and investment plans.

In response to the project delay, Nextdc has paused new development projects and land acquisitions, choosing instead to concentrate resources on meeting commitments tied to existing contracted capacity. This is intended to align spending more closely with the updated power‑delivery schedule at M3 and other sites.

Despite the setback, the company reported approximately A$8.7 billion of liquidity as at September 30 and stated that it remains in compliance with its financial covenants. This liquidity position is intended to support ongoing operations and prioritized capital projects while the M3 power issue is resolved.

Nextdc is also reviewing its customer agreements connected to the affected M3 capacity. The company said it is considering whether it may be entitled to relief under force majeure provisions and other relevant contractual clauses, given that the delay arises from factors outside its direct control, including community opposition and regulatory approvals.