Shares were down 5.83% to $10.6125 in mid-afternoon trading. The stock is down 1.62% for the year, reversing a pattern of big annual gains since 2019.

“Infratil’s result is largely in line with market expectations, but its guidance is slightly weaker than expected, with previously forecast earnings growth from CDC being pushed into FY2027 through a rephasing [delay in spending] by customers,” Nikko Asset Management New Zealand head of equities Michael Sherrock said.

“Given the focus on data centres, the CDC revenue timing will be taken negatively by the market.”

“They still think they’ll double CDC revenue over the next two years,” Sherrock told the Herald.

“But now they are saying more of the revenue will arrive in 2027. Investors had it expected it to be linear.”

Sherrock noted that approximately 80% of the data centre revenue over the next 24 months was already contracted.

Infratil said Morrison’s increased fees were “primarily driven by the outperformance of CDC and Gurīn, offset by Longroad Energy and RetireAustralia”.

CDC Data Centres has been relentlessly valued up nearly every quarter since Infratil bought a 48% stake in 2026 for A$392m ($422m) on the back of the cloud computing boom and, more recently, the insatiable thirst of artificial intelligence (AI) for computing power.

As of March 31, Infratil valued its CDC stake (upped to 50% after it bought out Australia’s Future Fund for A$216m in February) at between A$6.1b and A$7.1b from the year ago A$3.8b to $4.4b.

The largest increase was also the most recent as CDC’s valuation jumped by a third as the Future Fund sold its shares.

But Infratil noted the valuation was tied to the sale price of the Future Fund’s shares – an auction process involving external bidders – “which reinforces the strong private market demand for this sector and for CDC”.

READ MORE: Who is Infratil manager Morrison, the $38 billion firm that James Shaw just joined as partner?

Infratil’s stake in Gurin Energy was valued up from $237.1m to $493.0m as the Singapore firm gained key approvals for renewable energy projects around southeast Asia.

Longroad, a North American operator of solar and wind energy projects, faces challenges from US President Donald Trump’s war on clean energy subsidies. Infratil’s 37.3% stake in Longroad had a -$25.2m impact on Morrison’s incentive fees.

Changes make incentive fee more palatable – NZSA

“It’s a big incentive fee. I can’t walk away from that,” New Zealand Shareholders Association chief executive Oliver Mander told the Herald.

“But the main thing for us is that over the long term, the company continues to deliver and the incentive feels aligned with that over a multi-year period.”

Although Infratil booked a net loss, Mander said its accounts were always complex as it shifted its acquired or sold stakes in firms during the year. Its underlying earnings – reflected in its ebitdaf numbers – were strong.

Changes introduced from 2023 made Morrison’s incentive fee more palatable, Mander said.

One was a claw-back provision. If an asset did not continue to perform over the three-year payout period, then Morrison’s fee would be clipped.

A second was to make part of the payment in shares. For example, the next $200m payment (instalment one for FY2025, plus instalments for the second and third years of the previous three-year cycles) would be $80m in scrip, $120m in cash.

“That will help them with cashflow and it gives Morrison more skin in the game,” Mander said.

A third is that underperforming assets now chip down the incentive fee total. Mander noted Morrison had earned $360m from CDC’s increase in value, but had also seen decreases for Longroad and RetireAustralia.

“We would still like clearer disclosure,” the NZSA head said.

There was still a need for more transparency given the overlapping three-year cycles for incentive payments – and how much was being paid out for previous years versus the current year.

Sherrock said he did not have an issue with Morrison’s fees, given Infratil’s high returns to shareholders over the past few years.

Infratil said today while it had delivered a -2.6% return for shareholders in the year to March, it had generated a 17% average annual return over the past decade.

One NZ

Most firms in Infratil’s portfolio have already published results. An exception was One NZ – which had its first year of financials since Infratil bought out joint venture partner Brookfield (the pair bought Vodafone’s New Zealand business in 2019).

One NZ revenue fell from $1.996b to $1.921b but it increased its role as the largest contributor to Infratil’s operating earnings, chipping in ebitdaf of $604.0m from last year’s $545.5m, “despite a challenging economic backdrop”, an Infratil filing said.

One NZ’s ebitdaf guidance for FY2026 was $595m to $625m.

“Guidance is inclusive of circa $25m of incremental discretionary expenditure on SpaceX, AI acceleration and property relocation costs,” the presentation said (the telco is moving from Smales Farm on Auckland’s North Shore back to the CBD).

“Satellite TXT, launched in December 2024 in partnership with SpaceX, now has 380k+ active users, sending over 12,000 messages/day, providing unmatched emergency and rural coverage,” Infratil said.

Profit-challenged rival Spark earlier told the Herald it had inked a deal with an un-named American satellite operator for a text-by-satellite service that would go live in early 2026.

Industry chatter holds that it is SpaceX, but Spark won’t comment, and OneNZ won’t comment on the duration of its exclusivity deal.

Last November, privately-held 2degrees reported operating earnings increased by 16% (excluding one-off-gains from the FY23 70% sale of its celltower network) to $339m in the year to June as revenue rose by 7% to $1.34 billion.

In February, Spark reported a 21% drop in ebitdai to $419m (and a 64% drop in net profit to $35m) as its revenue fell 1.9% to $1.94b. The NZX-listed telco remains on a quest – first announced to the market in August last year – to raise up to $1b, potentially with a partner, for data centre expansion over the next five to seven years.

Infratil said it had contributed $494.2m in capital to CDC in FY2025 (up from $35.1m in FY2024) as part of the data centre operator’s $1b expansion push across Australia and New Zealand.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.