Microsoft pulls out of UK data center deal with Nscale, Telegraph reports

Oct 18 (Reuters) - Microsoft has pulled out of a data center deal with British cloud provider Nscale, Britain's Telegraph newspaper reported on Sunday.

The US tech giant, one of Nscale's two largest customers, recently terminated its agreement for the data center in Loughton, Essex, according to the report.

The newspaper did not specify why Microsoft withdrew from the project. Microsoft declined a Reuters request for comment.

The Telegraph report said Nscale had faced repeated delays with the project. National power grid officials, it reported, had told Nscale they did not expect a power supply for the data center until the 2030s.

"Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts," an Nscale spokesperson told 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."

Nscale filed for an initial public offering in the US last month, with Microsoft and Anthropic expected to be its major customers, according to its prospectus.

Nscale provides infrastructure, including compute, power and data centers, as well as software for training and running AI models. 

The Nvidia-backed AI group, which competes against CoreWeave, Nebius, Crusoe and Lambda, has grown rapidly since its launch, scaling from $100 million to more than $103 billion in total contracted value in just two-and-a-half years.

(Reporting by Nethra Sailesh and Gnaneshwar Rajan in Bengaluru; Editing by Joe Bavier)