Microsoft quits Nscale's UK data centre weeks before its IPO

According to The Telegraph on 18 October, relayed by Reuters, Microsoft ended its agreement to anchor Nscale's first UK data centre in Loughton, Essex. Nscale confirmed the withdrawal without giving a reason; Microsoft did not comment. Microsoft is one of Nscale's two largest customers.

UK media reported grid officials told Nscale the site would not have power until the 2030s. Nscale called it a "London-wide grid issue" with no impact on other contracts, and said it is securing alternative power and planning new UK sites. Microsoft reportedly remains on board for Nscale's Norway project.

Nscale filed for a US IPO last month. Its prospectus says Microsoft and Anthropic account for about 85% of contracts. Microsoft has reportedly signed statements of work worth up to $43.8 billion through December 2033. Reports differ on the offering: some cite a raise of up to $3 billion, others a valuation of up to $35 billion. Analysts say Nscale may need to price conservatively or delay.

Power, not chips, is the real bottleneck. The UK wants data centre investment, but grid capacity around London is booked for years. For neoclouds, customer concentration is a visible risk: one customer leaving one site can move an IPO valuation.

Nscale is a London-based AI infrastructure company that rents GPU capacity to large AI firms and runs data centre projects in the UK, Norway and Portugal. It became a prominent name in the UK government's AI infrastructure push and built a large order book quickly. That growth rests on a few big customers and unfinished sites, exactly the two risks IPO investors will price.

• Check your provider's customer concentration.
• Secure a region alternative for critical workloads in your contract.
• Ask when and how reliably a new data centre's grid connection is guaranteed.