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Meta terminates $300 million Denmark data centre expansion contract

The company is aiming to ensure its data centres can handle AI workloads and is currently re-examining its development plans

Meta confirmed that it has terminated a $300 million contract for the expansion of a data centre in Denmark that development had already begun. 

The tech giant has stopped the expansion of one of its data centres after cancelling the 2.4 billion kroner ($342 million) contract with Per Aarsleff Holding it signed in August, as reported by Bloomberg.

Construction company Per Aarsleff revealed it had been notified that the contract was terminated on 13 December, putting an end to the expansion of Meta’s data centres in Odense, Denmark’s third-largest city.

Meta currently has two data centres in Odense, with another set to open next year. The expansion project was planning to add an extra two buildings to store more servers and was estimated to be functional by the end of 2025.

The expansion itself had already started, with the construction company building sewers, foundations, cables, a canteen, and a 1,000-space car park.

"We are currently expanding our data centre in Odense with a third building that we expect to complete over the course of the summer of 2023," said Peter Münster, Nordic head of communications at Meta, in a statement to IT Pro. "We have decided not to move forward with the planned expansion beyond three buildings and we will be ending construction work on the two additional buildings."

The decision taken by Meta is part of a plan to create a more streamlined organisation, said Münster. As part of this, it's looking to shift more resources to higher-priority growth areas, including investing in AI.

"Supporting AI workloads at scale requires a different type of data centre than those built to support our regular online services. This is why we are focusing our efforts on building a new generation of data centers," said Münster

Meta has suffered a record drop in revenue recently, with the company announcing in November that it planned to lay off 11,000 staff and cut back on spending. It revealed it was cutting 13% of its staff after it didn’t reach the financial growth anticipated.

In Q3 2022, the company’s earnings report showed that its net income was down 52% compared to the previous year, and spending had increased by 19%. This was driven by increased investment in its metaverse technology as well as economic shifts. Revenue was down 4% across the quarter.

Despite this, Meta has continued other infrastructure projects around the world. Earlier this month, it revealed it had partnered with the Indian telco Bharti Airtel and the Saudi Telecom Company (STC) to bring the world’s biggest subsea cable to India. The project aims to improve India’s telecoms infrastructure through the 2Africa Perals subsea cable.

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