The Nextdc Ltd (ASX: NXT) share price will be on watch today after announcing a new data centre for Western Sydney.
Nextdc’s latest Sydney data centre
The Australian data centre business announced “S4”, which it called a significant long-term expansion opportunity.
Nextdc said that the purchase price of the S4 site is approximately $124 million.
This new data centre will provide services to the hyperscale cloud providers in a new availability zone within the Sydney market that is not currently serviced by Nextdc’s existing data centres (S1, S2 and S3 – which is currently under development).
S4 will also allow enterprise and government customers to scale their infrastructure platforms in this digital gateway region.
The S4 site is in Horsley Park, approximately 42km west of Sydney’s central business district and close to a major electricity substation as well as telecommunications, utilities and public infrastructure. The site covers approximately 124,000sqm.
This site is expected to accommodate a data centre facility capable of approximately 300MW of capacity. The facility is expected to house customers’ mission critical operation centres, administrative offices and collaboration spaces. S4 is expected to generate more than 500 new jobs during the development phase over several years.
Nextdc explained that it will progressively settle on the land parcels comprising the S4 site as they are made ready for development between the second half of FY24 and the first half of FY21.
Management comments
Nextdc CEO and managing director Craig Scroggie said: “The demand for premium quality data centre assets in digital gateway regions such as Sydney continues to reflect the growth trajectory of technology infrastructure over the next decade. Nextdc looks forward to being able to offer its customers dual availability zone solutions across its existing S1 and S2 Macquarie Park and S3 Gore Hill metropolitan data centres as well as this new S4 hyperscale campus in Western Sydney.”
Summary thoughts on Nextdc and the share price
Nextdc is a very interesting business which is exposed to strong digitalisation tailwinds. However, I’m not sure how profitable Nextdc can become and how strong its economic moat is.
For that reason, there are other ASX growth shares that I’d rather be looking at for my portfolio right now.
