SYDNEY, Nov 9 (Reuters) - Australian data centre operator NextDC said on Monday it would stop work on all projects without customer contracts following a big setback on a facility in Melbourne, as two major rivals finalised buying an A$715 million ($492 million) stake in the company.
A suspension of work on its 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%.
The decision to pause uncontracted projects after the Melbourne delay 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."
NextDC's rivals Goodman Group and its New York-listed partner, Digital Realty, bought a 9.9% stake in the company last week following the share price plunge.
"When you have a challenge like we've had in the last couple of weeks, it's not really any surprise to me that people ... look at that and say, now might be the time," Scroggie said.
Goodman and Digital Realty said they had no plans at the moment to launch a takeover offer, but reserved the right to do so. They said 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.
($1 = 1.4520 Australian dollars)
(Reporting by Christine Chen in Sydney. Editing by Scott Murdoch and Sonali Paul)
