The Edinburgh-based manager Aberdeen has absorbed a loss of around 200 million pounds after Airband, a rural broadband builder it backed, fell into administration. The hit fell across two of its infrastructure vehicles, the Standard Core Infrastructure II and Aberdeen Standard Core Infrastructure III funds, and it lands as a reminder that even patient, long-term investments can sour.
Airband set out to bring fast connections to parts of the country that larger providers had passed over. For a time that looked like a sound bet. Demand for full-fibre broadband was climbing, rural areas were plainly underserved, and government subsidy schemes were helping to fund the roll-out. A wave of investors moved in on that logic. The economics, though, proved harder than expected.
Aberdeen pointed to a familiar list of pressures behind the failure: higher build costs, slower customer growth than forecast, tougher competition, and a financing environment that has grown far less forgiving as interest rates settled at higher levels. Laying cable is expensive and slow, and if households sign up more gradually than the model assumes, the numbers stop working.
Airband was not alone. Several alternative broadband operators have faced writedowns or restructurings over the past two years, as the same combination of costs and competition caught up with them. The sector’s early promise has given way to a harder reckoning.
There was at least an orderly ending. Voneus, a rival rural broadband provider, acquired Airband’s network and customers, though the price was not disclosed. HSBC and Lloyds, which had lent to the company, also took losses on the sale.
For Aberdeen, the setback is painful but, by its own account, contained. The firm stressed that Airband was one holding within a diversified portfolio that has otherwise performed strongly, and it still expects the wider fund to deliver positive returns. That is the case for spreading risk across many assets rather than a few: a single failure stings without sinking the whole.
The wider lesson sits with anyone drawn to infrastructure on the promise of steady, utility-like income. Long-term assets are not risk-free, and a story that looks compelling at the outset can be undone by costs and competition that only reveal themselves over time. For Scotland’s investment community, Airband is a case study in how quickly a favoured theme can turn, and why diversification remains the first line of defence.
