Australian data centre giant NextDC loses 40% of share value as expansion stalls

• NextDC shares plunged 40.2 per cent to an eight-year low of $5.48 in early Wednesday trading.

• Community opposition to power upgrades at its Melbourne facility has put $140 million in expected revenue and earnings at risk.

• The company will cut planned spending by $750 million and is considering selling development sites to conserve cash.

Shares of Australia’s largest listed data centre developer have crashed amid a community backlash that will cause issues for the development of its flagship site.

NextDC shares were down 40.2 per cent to an eight-year low of $5.48 in early trading on Wednesday.

The Brisbane-based company, which operates 17 data centres in Australia, said in a statement that it was downgrading its guidance and taking steps to reduce expenditures.

Because of community opposition, power operator Jemena suspended work in September to increase electricity grid supply to NextDC’s M3 data centre on the outskirts of Melbourne.

The work involved replacing electricity poles in parts of Yarraville and West Footscray with much larger poles capable of transmitting 66 kilovolts of power.

“Jemena has attributed the suspension to safety concerns and lack of access to work sites arising from community and stakeholder opposition to the works and to the local council, as the relevant road authority, not giving its consent while further community consultation takes place,” NextDC said in a statement.

The power company has told NextDC that it doesn’t intend to recommence work on the project before February.

As a result, NextDC has removed the affected M3 contracts from its guidance for its 2026/27 earnings.

It had been counting on $140 million in both net revenue and underlying earnings from those contracts.

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To conserve cash, NextDC said it plans to reduce its 2026/27 capital expenditure by $750 million, to between $4.5 billion and $5 billion.

It is also exploring selling certain development sites it doesn’t need in the near term.

The M3 site has operated since 2022 in West Footscray, about 10km from Melbourne’s CBD. It spans 41,000 metres of technical space, the size of eight downtown city blocks.

NextDC is also facing delays with the final stages of the expansion project at the site, which could delay its contracts for 2027/28.

Installation of new transformers at the Brooklyn Terminal Station will take longer than expected, and the Victorian government still hasn’t signed off on a planning permit that was lodged back in February.

Founded in 2010 by tech entrepreneur Bevan Slattery, NextDC operates 17 data centres across Australia and one each in Kuala Lumpur, Tokyo and Auckland.

-AAP