Microsoft Reportedly Exits Nscale Loughton Data Centre

Microsoft has pulled out of a deal to be the anchor tenant of Nscale’s planned AI data centre in Loughton, Essex, according to The Telegraph. Nscale is the British AI infrastructure company preparing for a stock market listing in New York. The report comes from a single outlet, and Microsoft has not commented. Nscale says it remains committed to the site and that its other Microsoft contracts are unaffected.

What The Telegraph reported

Microsoft, “one of Nscale’s two largest customers, recently informed the company that it was pulling the plug on its agreement, which was announced last year”, The Telegraph’s technology editor James Titcomb reported on Sunday 18 October. TSN read the full article via the Telegraph’s syndicated copy on Yahoo Finance; the original is on the Telegraph’s website.

According to the report, Microsoft “was to become the anchor tenant at the company’s first British data centre in Loughton, Essex”. An anchor tenant is the main customer whose long-term commitment helps justify, and often finance, a new building.

“Microsoft’s cancellation leaves the site in apparent limbo,” The Telegraph wrote. “The company was its only announced customer, having agreed to rent 23,000 Nvidia AI chips at the facility.”

The paper said the site was “originally intended to come online next year”, but has faced repeated delays, “with grid bosses telling Nscale that they do not expect a power supply until the 2030s”. It did not name the grid operator.

The Telegraph did not give a reason for Microsoft’s decision. Investing.com, in a follow-up report, noted that “The Telegraph did not establish a specific reason for Microsoft’s withdrawal”, and that “Microsoft had not publicly commented on the reported withdrawal”. TSN has found no statement from Microsoft.

What Nscale says

An Nscale spokesman 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.”

Nscale has not published a statement on its own website that TSN has found.

What the Loughton deal was

Nscale and Microsoft announced the Loughton project on 16 September 2025, alongside what Nscale called the UK-US Technology Partnership. In its press release at the time, Nscale said the site would “deliver 50MW of AI capacity, scalable to 90MW, and will initially house 23,040 NVIDIA GB300 GPUs delivered in Q1 of 2027”. It said the facility would “play a vital role in providing Microsoft’s Azure services across the UK”. Microsoft chief executive Satya Nadella was quoted calling it “the UK’s largest supercomputer, powered by over 23,000 GPUs”.

Two days later, Microsoft’s cloud chief Scott Guthrie wrote on the company’s official blog: “In Loughton, UK, we announced a partnership with nScale to build the UK’s largest supercomputer to support services in the UK.”

The chips were planned for delivery in 2027. TSN has not seen evidence that the 23,040 GPUs named in the 2025 announcement have been installed at Loughton.

According to The Telegraph, Microsoft’s backing for the project “formed part of £22bn in UK investments promised by the tech company last year”. It added that ministers “have lobbied local councillors to push it through”.

How big a customer is Microsoft for Nscale?

Very big, though the Loughton deal itself appears to be a small part of the relationship. “More than 40pc of Nscale’s $103bn in contracted revenue comes from Microsoft, although the UK deal is believed to be a small part of that,” The Telegraph reported.

Nscale’s own registration statement for its US listing, filed with the US Securities and Exchange Commission on 18 September 2026, gives the underlying figures. It says that as of 31 August 2026 the company had “$103.4 billion of active and contracted TCV under long-term take-or-pay contracts”. TCV is total contract value, the money customers have committed to pay over the life of their contracts. “Take-or-pay” means customers pay for the capacity they have reserved whether or not they use it.

The filing says that between September 2025 and April 2026, Nscale “entered into statements of work with Microsoft that provide for payments to us of up to approximately $43.8 billion through December 2033, not including the optional extensions”. It also lists agreements with Anthropic worth “up to approximately $44.6 billion”. Among its risk factors, the filing names “grid connection delays and capacity constraints”.

There is no indication in the reporting that Microsoft has cut any of its other Nscale contracts, and Nscale says the grid problem has “no impact” on them.

Why it matters for Nscale’s listing

The Telegraph says Nscale has been privately valued at $15bn and is pursuing a Wall Street flotation “worth up to $35bn (£26bn)”. It said Microsoft’s decision “threatens to undermine” those plans.

The timing is difficult. Nscale’s flagship data centre in Glomfjord, Norway, is reportedly running about six months behind schedule. Australian rival Firmus pulled its own listing earlier this month, citing market conditions according to The Telegraph, and Gartner has warned that more than $3.5 trillion of AI infrastructure spending could face write-downs by 2030.

The UK power problem

The Telegraph notes that “high electricity prices and long waits for grid connections have been seen as a major barrier to building AI infrastructure in Britain”. It also reported that in April, OpenAI “suspended plans for a ‘Stargate’ AI facility with Nscale on Tyneside, citing Britain’s high electricity prices”.

Power is a recurring theme. TSN reported this week that the UK government had rejected a bid for an AI Growth Zone built around a 1.2GW data centre at Drax. In the US, by contrast, Microsoft has signed a 20-year deal for about 1,100 MW of power in north-west Indiana.

What we don’t know

Whether Microsoft confirms it. The report rests on The Telegraph’s reporting, and Microsoft has not commented.
Why Microsoft pulled out. No reason has been given. The grid delay is the obvious backdrop, but neither company has said it was the cause.
The terms. It is not known whether the agreement allowed Microsoft to exit, or whether any penalties apply.
What happens to Loughton. Nscale says it is exploring alternative power sources, but has not named a new customer or timetable.

The Bottom Line

Microsoft has reportedly walked away from being the anchor tenant of Nscale’s planned Loughton data centre, which The Telegraph says may not get grid power until the 2030s. Nscale says it is sticking with the site and that its wider Microsoft contracts are unaffected. Microsoft has not commented, and no reason has been given. This is not investment advice.