Microsoft has pulled out of a deal to anchor Nscale’s first British data centre, the Telegraph reported. The move comes as the AI cloud startup prepares to go public.

The site in Loughton, Essex, has faced a string of delays, Bloomberg reported, citing the Telegraph. The paper did not say why Microsoft walked away.

Authorities have told Nscale not to expect a power supply until the 2030s. TNW reported in July that the grid could not connect the site in time for its planned opening.

Nscale said it was still committed to the site and was looking at other power sources and UK locations.

“Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts,” a spokesman told the Telegraph.

Microsoft did not comment to the Telegraph, and did not immediately respond to Bloomberg.

Bad timing

Nscale is seeking to raise as much as $3bn in an IPO as soon as this month. Microsoft and Anthropic account for about 85% of its contracts, according to its IPO filing.

Anthropic agreed in August to spend $45bn on Nscale compute over six years. Microsoft has also signed a letter of intent for a West Virginia campus.

Nscale’s flagship site in Norway is six months behind schedule, Bloomberg said. Only 6.4 megawatts of a planned 30-megawatt data centre is running.

Neocloud jitters

Investors are already wary of neoclouds, the companies racing to build AI computing hubs. Many are borrowing heavily to fund the build-out.

CoreWeave shares fell 25% last week, their worst week since November. Australia’s Firmus also scrapped its IPO after failing to win enough support.