Monday, 12 November 2018 11:07

NextDC confirms contract commitments ahead of new Sydney data centre completion Featured

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Artist impression of NextDD S2 data centre due to open in 2019 Artist impression of NextDD S2 data centre due to open in 2019

Data centre operator NextDC is on a track to open its new Sydney S2 data centre in the first half of 2019 and says the facility has now increased its contracted commitments by approximately 9MW to more than 14MW — or 47% of total planned capacity — since 30 June.

The S2 data centre remains under development, with critical infrastructure build-out expected to continue for at least another two years, and NextDC says revenue recognition for the new contracted commitments will ramp up during FY20, with the full run-rate impact expected to be recognised in FY21.

According to NextDC, the demand for its data centre services continues to accelerate and exceed expectations, including the S2 data centre which it says is is already half full prior to opening.

At the start of S2 construction, the site’s initial planned capacity at opening was only 6MW in phase 1, but when the company announced FY18 results, an additional 8MW of new capacity was announced to reflect what the company says was demand expectations at the time.

NextDC says that given recent positive developments in the Sydney market, it will now bring forward an additional 8MW (phase 3), and as a result, the current capacity under design and development for S2 is now 22MW of the 30MW total planned capacity.

This will not change the company’s existing FY19 capex guidance — between $430-$470 million — as the additional capex will form part of the additional capacity to be delivered in FY20, NextDC said in a statement issued on Monday.

“We advised the market at the time of FY18 results that the company’s sales pipeline was very strong and the timing of large sales to the hyperscale cloud market would be unpredictable given the long run nature of the sales cycle. We’re very pleased to have now locked in material MW contracted commitments against these expectations,” said chief executive Craig Scroggie.

“The demand for our data centre services continues to accelerate and exceed our expectations, particularly in the Sydney market, yet requires discipline and patience as the nexus between the hyperscale capacity planning, site development, infrastructure deployment and revenue recognition can in practice be two to three years for these very large hyperscale developments. This is all part of NextDC's digital infrastructure business model, which continues to build long-term value through contracted capacity and tangible asset backing.”

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).

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