Microsoft has pulled out of a UK data centre deal with the British neocloud Nscale, Bloomberg and Reuters reported on 18 October, citing the Telegraph. Microsoft was to be the anchor tenant at Nscale’s first British data centre, in Loughton, Essex.
According to the Telegraph, Microsoft was the site’s only announced customer and had agreed to rent 23,000 Nvidia AI chips there. Nscale’s IPO filing lists Microsoftstatements of work worth up to about $43.8 billion through December 2033.
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The key insight: As we read it, Loughton is where Nscale’s contracted value meets the physical grid: its filings count up to about $43.8 billion of Microsoft work, and the Telegraph reports that grid bosses do not expect a power supply at the Essex site until the 2030s.
The Telegraph reported that Microsoft, one of Nscale’s two largest customers, recently told the company it was pulling the plug on the agreement, which was announced last year. Bloomberg said the newspaper did not give a specific reason.
The Telegraph said the site, which contains thousands of Nvidia AI chips, was intended to come online next year but has faced repeated delays, with grid bosses telling Nscale they do not expect a power supply until the 2030s.
The newspaper also reported that Microsoft’s backing for the project formed part of the £22bn of UK investments Microsoft promised last year during Donald Trump’s state visit.
Nscale’s Form S-1 of 18 September 2026 lists $103.4 billion of active and contracted total contract value as of 31 August, including Anthropic Services Agreements worth up to about $44.6 billion and Microsoftstatements of work worth up to about $43.8 billion through December 2033. The remaining $15.0 billion is our arithmetic. Source: Nscale Form S-1.
James Titcomb, who broke the story for the Telegraph, posted it on X at 06:25 UTC on 18 October: Microsoft cancels its UK data centre deal with Nscale, which โComes just as Nscale hopes to pull off a $35 billion IPOโ. The $35 billion figure is the Telegraphโs.
Bloomberg posted its report on X at 08:50 UTC on 18 October: Microsoft has pulled out of a UK data centre deal with Nscale โat a critical time for the startupโs initial public offering hopesโ, citing the Telegraph. This piece leads its attribution with that report.
What Nscale’s Filings Say
Nscale’s S-1, filed on 18 September, says that between September 2025 and April 2026 it entered into statements of work with Microsoft “that provide for payments to us of up to approximately $43.8 billion through December 2033”, subject to delivery and availability of service requirements.
The same filing gives up to about $44.6 billion for the Anthropic Services Agreements signed on 25 August, and $103.4 billion of active and contracted total contract value as of 31 August. Bloomberg said Nscale relies on Microsoft and Anthropic for around 85% of its contracts.
The Telegraph reported that more than 40% of Nscale’s $103bn in contracted revenue comes from Microsoft, although the UK deal is believed to be a small part of that. Nscale’s 12 August draft filing described “an approximately 50 MW site in Loughton, London”.
The Telegraph reported that Microsoft had agreed to rent 23,000 Nvidia AI chips at the Loughton, Essex site and that grid bosses do not expect a power supply until the 2030s; Nscale’s 12 August 2026 draft filing described an approximately 50 MW site in Loughton.
What Nscale Said
An Nscale spokesman told the Telegraph, in a statement Nscale also gave Reuters:
“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 Bloomberg or Reuters outside business hours.
The IPO Backdrop
Bloomberg said Nscale is seeking to raise as much as $3 billion in an IPO as soon as this month. The Telegraph reported a flotation worth up to $35bn, against a private valuation of $15bn.
Bloomberg also reported that Nscale’s flagship site in Norway is six months behind schedule, with only 6.4 megawatts of the intended 30-megawatt data centre running. We reported on 10 October that Nscale’s first IPO draft named ByteDance as its largest customer.
As we read it, the reports and the filings measure different things: the Telegraph puts Microsoft above 40% of Nscale’s $103bn in contracted revenue and calls the UK deal a small part of that, while the S-1 gives Microsoftstatements of work worth up to about $43.8 billion, subject to delivery and availability of service requirements.
As we read it, the timing ties the story to the listing: Bloomberg says Nscale is seeking to raise as much as $3 billion in an IPO as soon as this month, and that it relies on Microsoft and Anthropic for around 85% of its contracts.
As we read it, Nscale’s statement separates the customer from the site: it says its relationship with Microsoft “remains strong and long-term” and describes the problem as a “London-wide grid issue”.
An Nscale spokesman, to the Telegraph, 18 October 2026
“Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts”
Three Implications
NSCALE’S IPO Bloomberg says the company is seeking to raise as much as $3 billion as soon as this month; the Telegraph puts the flotation at up to $35bn.
THE LOUGHTON SITE Nscale says it is exploring alternative power sources for the site; per the Telegraph, grid bosses do not expect a power supply until the 2030s.
NSCALE’S CONTRACT BOOK Its S-1 lists $103.4 billion of active and contracted total contract value, with up to about $44.6 billion from Anthropic and up to about $43.8 billion from Microsoft.
The framework puts it this way: “The structural bottleneck isn’t computing, it’s electrons.”
As we read it, Loughton fits that description on the reported facts: the Telegraph says the site contains thousands of Nvidia AI chips, and that grid bosses do not expect a power supply until the 2030s. The framework was published in December 2025 and does not discuss Nscale.
What Is Not Established
The reports do not say why Microsoft withdrew; Reuters said the Telegraph did not specify a reason, and Microsoft has not commented. It is not stated what Microsoft’s Loughton agreement was worth, or how much of the up to $43.8 billion in its statements of work it covered.
We read the Telegraph’s print text, Bloomberg’s and Reuters’ reports and Nscale’s filings. We did not contact Microsoft or Nscale.
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The State of AI Data Centers
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The Telegraph reported that Microsoft has pulled out of the Loughton, Essex deal under which it was to rent 23,000 Nvidia AI chips as anchor tenant at Nscale’s first British data centre. Grid bosses have told Nscale they do not expect a power supply there until the 2030s, the newspaper said.
Nscale says it remains committed to the project and that the grid issue has no impact on its other contracts. Its S-1 lists Microsoftstatements of work worth up to about $43.8 billion through December 2033.
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A note on sourcing. The withdrawal was first reported by The Telegraph; we read its print text, and Bloomberg’s and Reuters’ reports of it, in full. Contract figures come from Nscale’s own S-1 and draft registration statement on SEC EDGAR; the chart’s $15.0 billion for all other contracts is our arithmetic ($103.4 billion less $44.6 billion and $43.8 billion). We did not contact Microsoft or Nscale. The references to our earlier reporting link to our own pieces.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur, HackerNoon and Search Engine People. Find him on LinkedIn and Substack. See how we source.
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