Power Poles in Melbourne Cost NextDC A$140m of FY27 Revenue

A suspended power pole replacement in Melbourne's inner west has taken about A$140 million out of NEXTDC's forecast revenue for the 2027 financial year. The ASX-listed operator told the exchange on 21 October 2026 that Jemena Electricity Networks had suspended parts of the 66kV line augmentation works that feed its M3 Melbourne data centre, and that the next increase in grid supply to the site is now expected in FY28, deferring the delivery and billing of contracted capacity with it.

Jemena suspended the works in September 2026 and has since formally notified NEXTDC that it does not expect to recommence them before February 2027. The release says Jemena 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.

What came out of the guidance

The revised revenue and earnings ranges exclude the affected M3 contracts entirely, including capacity already billing, because while parts of Jemena's works are suspended the existing grid supply cannot be relied on to support the full contracted power ramp in data halls already delivered. On capital expenditure, stripping out the capitalised interest that the new range includes and the old one did not, the like-for-like reduction is about A$980 million, or 17 to 19 per cent.

Shares closed 41.7 per cent lower at A$5.35 on Wednesday 21 October, their lowest level since 2018. The Australian Financial Review reported on 22 October that the fall wiped almost A$3 billion off NEXTDC's market value, and that some investors were questioning a month-long delay in disclosing that the power works were in trouble.

A planning decision now stuck behind an election

The grid is not the only queue. The Victorian government's decision on a planning permit for M3 Stages 6 and 7, application PA2604231, lodged in February 2026 under the state's Development Facilitation Program, is taking longer than NEXTDC expected. The government becomes subject to caretaker conventions from 3 November 2026 ahead of the state election on 28 November, and the company now expects no decision until 2027. Later increases in supply also depend on upstream work to install new transformers at the Brooklyn Terminal Station, the first of which NEXTDC now expects later than planned.

The contracts and the covenants

The deferred capacity remains under contract, subject to the customer's rights. Those contracts provide for service level credits where capacity is delivered late or is not fully powered and, in some circumstances, give the customer rights to terminate; NEXTDC said it is considering whether relief is available to it under the force majeure provisions. The company had A$8,675 million of liquidity at 30 September 2026, comprising A$1,275 million of cash, A$6,700 million of undrawn senior debt facilities and a A$700 million committed hybrid tranche, and said it remains in compliance with its covenants. It also said its ability to draw those senior facilities depends on expected customer billing profiles, and that delays to grid supply at M3 could be a material change to them.

The board has put all new development projects and land acquisitions on hold, and will announce the outcome of a capital expenditure review by the annual general meeting on 20 November 2026. It will also evaluate capital recycling, including the potential sale of development sites not required in the near term.

None of this is a demand problem. Construction of the M3 data halls is continuing inside the existing buildings and the capacity is contracted. The honest reading is that the binding constraint on AI infrastructure has moved again, from chips to generation and now to the last few kilometres of distribution network and the residents who live beside it, a pattern Parallax Nexus traced through FERC's rejection of PJM's large-load plan and Microsoft's exit from Loughton. What is not known is whether the customer will exercise any of its rights, or what the delay does to the fair value of NEXTDC's investment properties, which the company says it has not yet quantified and will reflect in its half-year results to 31 December 2026.