Microsoft scraps UK data centre deal with Nscale, Telegraph says
The facility’s site has been contending with a series of delays, the newspaper adds
Published Sun, Oct 18, 2026 · 05:33 PM
[LONDON] Microsoft has pulled out of a UK data centre deal with British neocloud Nscale at a critical time for the startup’s initial public offering hopes, the Telegraph reported.
The newspaper did not provide a specific reason for why the US tech giant had pulled the plug on the deal in Loughton, Essex, though it said the site has been contending with a series of delays.
Authorities have told Nscale they do not expect a power supply to the facility until the 2030s, it added.
Nscale’s flagship site in Norway is also six months behind schedule, with only 6.4 megawatts (MW) of the intended 30 MW data centre up and running.
Nscale relies on Microsoft and Anthropic for around 85 per cent of its contracts, going by an IPO filing, and the former had been set to become the anchor tenant at Nscale’s first British data centre in Essex.
Microsoft’s withdrawal would mark a setback for the company that is seeking to raise as much as US$3 billion in an IPO as soon as October, and which was already contending with investor jitters over the risks of the wider artificial intelligence build-out.
Nscale is one of the most prominent neoclouds, a new group of companies seeking to build huge computer complexes for AI.
They want to cash in on the hundreds of billions of dollars big tech companies have pledged to spend on the technology and are a key part of the AI boom’s supply chain.
An Nscale spokesperson told the Telegraph: “We remain committed to both the Loughton project and the UK and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK.
“Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts.”
Microsoft did not comment to the Telegraph and did not immediately respond to queries by Bloomberg.
The backdrop to Nscale’s IPO ambitions has turned gloomier in recent days, with fellow neocloud CoreWeave in the spotlight last week after the co-founder said the company was exploring ways to borrow in investment-grade debt markets, where there are vast pools of money from insurers to tap.
Investors had already grown cautious of AI computing suppliers due to the tens of billions of dollars they and their customers are borrowing to finance the massive build-out of data-centre capacity.
CoreWeave shares plunged in the first three sessions of the week, then bounced back somewhat, before concern returned on Friday, leading to the the stock’s worst week since November with a 25 per cent drop.
That also came in the wake of Australian data centre company Firmus scrapping its plans for an IPO, after the deal failed to garner enough support for the marketed share price. BLOOMBERG
