Microsoft reportedly exits Nscale UK data centre project as the AI cloud firm readies its IPO

MSFT has withdrawn from a planned Nscale data centre in Loughton, Essex, the Telegraph reported on October 18, adding uncertainty to the British AI infrastructure provider's effort to raise as much as $3 billion through an initial public offering. Microsoft had been set to be the anchor tenant, and it declined a Reuters request for comment. The Telegraph did not report a reason for the exit.

The project had faced repeated delays, and grid operators had reportedly told Nscale they did not expect a power supply for the site until the 2030s. Nscale said its "relationship with Microsoft remains strong and long-term," that "this unfortunate London-wide grid issue has no impact on our other contracts," and that it is "exploring alternative power sources for the site." It did not deny the withdrawal.

The setback lands weeks before Nscale's planned listing. The company filed for a US IPO last month, with Microsoft and Anthropic expected to be its major customers, and it competes with neoclouds such as CRWV, Nebius, Crusoe and Lambda. Losing the anchor tenant at a flagship UK site puts customer concentration at the centre of the IPO pitch.

What to watch: whether Nscale revises its IPO timing or size, whether it finds alternative power or a new tenant for Loughton, and whether Microsoft says anything about its UK capacity plans when it reports fiscal first-quarter results. The episode is also a reminder that grid access, not chips, is becoming the binding constraint for new AI capacity in the UK.