Welcome to the Brookfield Infrastructure Partners 2017 Year End Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions [Operator Instructions]. At this time, I would like to turn the conference over to Mr. Rene Lubianski, Senior Vice President, Corporate Development. Please go ahead, Mr. Lubianski.

Thank you, and good morning. Thank you all for joining us for Brookfield Infrastructure Partners’ fourth quarter earnings conference call for 2017. On the call today is Bahir Manios, our Chief Financial Officer and Sam Pollock our Chief Executive Officer. Following their remarks, we look forward to taking your questions and comments. At this time, I’d like to remind you that in responding to questions and in talking about our growth initiatives, and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I would encourage you to review our Annual Report on Form 20-F, which is available on our Web site. With that, I’ll turn the call over to Bahir.

Great. Thank you, Rene and good morning everyone. 2017 was another positive year for Brookfield Infrastructure, completing a successful decade for our business. We continue to execute very well on our overall business strategy and achieved meaningful growth on a relatively low risk basis, generating strong financial results as we grew our funds from operations or FFO per unit by 14% compared to the prior year. In addition to these strong financial results, some of our major accomplishments for the year included, an investment of $1.3 billion into a highly strategic Brazilian utility that serves the country’s growing natural gas sector. This is the business that generates the stable cash flows, supported by long-term contract, has no volume risk and inflation index revenues. Second, we invested $900 million into several organic growth capital projects. These projects increase the size of our utilities rate base and we will expand our transport energy and communication infrastfcuture networks. Third, we secured $400 million of accretive tuck-in acquisitions that will enhance our existing toll road and district energy businesses. Fourth, we raised $1.3 billion of new capital in the form of common equity debt and preferred shares to bolster our balance sheet and liquidity that will finance the number of growth initiatives we are pursuing. And finally, we signed a binding agreement to sell our interest in Transelec, our Chilean electricity transmission business for $1.3 billion at an attractive valuation. With respect to our results from operations, in 2017, Brookfield Infrastructure earned FFO of $1.17 billion or $3.11 on a per unit basis. Results reflected contributions from new investments and organic growth of 10% generated across our operating groups. The negative impact of a strong U.S. dollar reduced results by approximately $30 million and FFO per unit was also affected by our equity issuance…

Thank you, Bahir, and good morning, everyone. As Bahir mentioned, we have deployed significant capital this year in both the organic growth and new investment fronts, and have made good progress with our capital recycling program. While global M&A activity remains frosty, we've been disciplined and focused on situations where we can leverage our competitive advantages to invest for value and we’ve disposed off mature businesses at premium valuations to redeploy the proceeds into higher returning opportunities. I’ll take this time to provide an update on a few of the initiatives underway, as well as provide a bit of an outlook for the business in the current economic environment. To start with, in November, we signed a binding agreement to acquire a minimum 53% controlling interest in gas natural Colombia, the second largest natural gas distribution system in Colombia. The business operates a high quality distribution system with regulated revenues and predictable cash flows comprised of over 21,000 kilometers of pipeline, severing approximately 2.9 million residential, industrial and commercial customers within the City of Bogotá and around. The business operates in a transparent and collaborate regulatory environment, where Brookfield has experienced owning and operating other regulated assets. We also have the ability to deliver incremental value and grow revenues through the offering of ancillary services. At the end of December, we acquired initial 11% stake in the company along with our institutional partners, and we were making subsequent investments in a staged approach during the first half 2018. This will include a private purchase of the remaining interest held by the largest shareholders, as well as a minority tender offer for the remaining minority interest. This may result in close to full ownership of Brookfield Infrastructure and its institutional partners. In total, the opportunity for 100% ownership will require an…

[Operator Instructions] The first question comes from Frederic Bastien with Raymond James. Your line is open.

You noted that a greater proportion of BIP’s investment activity will be directed at organic growth in the future, but CapEx invariable takes longer to produce FFO than acquisitions. How much of what we should expect from the timing deployed capital and the timing this capital as you start generating FFO and just curious if that actually influences at all your organic growth expectations?

I'll start on the, Fredric, and Bahir might add some more color as well. I guess, my first reaction to your question is that, given the continuous nature of the CapEx and the backlog, I think we always have new projects being commissioned, as well as new projects being started. So I'm not sure there will be a necessary lag in the business, because it’s a steady growth profile. As we ramp up, I guess, you’re probably right, there may be a bit of a delay or maybe you will see in effect higher organic growth rates because of that. But I don’t think that will be a meaningful change in our growth profile. I think as often is the case in fact our M&A activity tends to be a bit more lumpy as they come in bits and spurts. And so that’s probably where we have a bit more of the variability in our FFO growth, because if we do a large transaction then that could have a meaningful impact. But there could be a period of time when we're being patient and disciplined and then we don’t have that impact on our results. So I'm not sure I fully answered your question, but hopefully that was helpful.

Maybe I can reword it another way, and you’re going to get significant proceeds from the sale of Transelec, you obviously can't redeploy that on day two. So are you comfortable that you can readily deploy that capital in a pretty short period of time?

So what I'm very comfortable in stating is that we will find great opportunities to deploy that capital in a reasonable period of time. What I don’t want to state, because we pride ourselves on being very disciplined and super selective in our opportunities is that we’re in a rush to deploy. In fact, given the market conditions, if there is further weakness then I will be very happy to sit on the cash for little bit and take advantage of any more distress seller that could come along. So we like to be patient. We're in no rush to deploy it. But if we see great opportunity, as Bahir said having that strong liquidity, allows us to move quickly and take advantage of those opportunities.

And in past calls we talked about NTS and you mentioned that you like the way that the rates were going, and you mentioned that you may be considering adding leverage to the business. How do you guys think about it right now?

So we're still evaluating it. We're getting proposals from various institutions. The market appears to be quite favorable. We haven't made a final decision though. But there is a good probably that we’ll do something sooner than later, I guess that’s all I can say.

Just last one from me more pretty straight forward here. You mentioned that U.S. dollar reduced your results by about $30 million for the year. Didn’t get through all of the supplemental just yet. Can you indicate what the impact was on Q4?

So $30 million was -- you’re correct the impact for the full year for Q4 it was about $67 million. So predominantly most of that effect happen in the first nine months, Q4 was a little bit lighter from that perspective.

Your next question comes from Cherilyn Radbourne with TD Securities. Your line is open.

Sam wanted to start with the bigger picture question for you, and that is where do you think we are in the cycle. And what I’m driving out there is the M&A market would tend to suggest that we’re pretty late cycle and yet as you talk about in your letter, your industrial and commodity base customers seem to be in the early stages of a recovery following a pretty severe downturn. So I’m just curious what you make of those dynamics and what you think they mean for BIP?

I’d say a great question Cherilyn. And I think the answer to that I guess in our view and look we are not experts in predicting cycle. So this is probably not worse all that much. But while we said we are in very favorable environment with synchronized growth around most of the world. I think in relation to the cycle, it may not be so synchronized. I think in relation to maybe the consumer related industries where they’re dependent on optimistic consumers with lots of capital, maybe we’re more in the late stages, because housing prices feel like they’re high and debt levels are high, particularly in number of countries like Canada and the UK, and Australia. But in some of the commodity type areas, maybe as you said, we might be in a different point of cycle, because they’ve already shaken out a bit. So I think we might see different reactions in different sectors that may not be the same as in past cycles. So as it relates to BIP, I think our view is that our commodity related businesses are going to experience a period of growth for the next couple of years. It feels like we’re heading into a period of expansion. And because it takes such a long time for them to scope projects and bring them online, that will play out for a couple of years. But on the consumer led areas, I feel like I am little bit more cautious on those fronts. So I don’t know if that covers or not…

I think everybody is struggling with that question. My second question is easier. In terms of the smart meter opportunity, obviously you’ve been able to add a lot of capital to a marquee asset. Just curious where that smart meter opportunity has run its core, or there is still more smart meters coming up for tender?

So look, we were very pleased to execute on that large contract if we adopted and all the meters that we've secured so far, we think are offering size up to 3.5 million units. I think there is still a lot more to come and there is up to 20 million meters that could come as early as 2020. We're not trying to indicate that we will win all of that. But if we can take a sufficient market share of that number, we think we would do very well just given the risk adjusted returns profile here. So definitely, attracted to the products offering and optimistic in our ability to secure some more in the future.

Your next question comes from Devin Dodge with BMO Capital Markets. Your line is open.

Can you provide an update on where you’re seeing the most attractive opportunities from a new investment point of view? And just given some of your commentary on the distribution increase and pushing more capital into organic growth, should we take us to mean that the M&A pipeline is perhaps a little less robust than it has been in the recent past?

So maybe I start with your last comment first, and then come to -- I'll give a brief overview of where we see opportunities around the world. As far as M&A activity, it's very high. So I think it's a strong as it's ever been. Having said that, there is a lot of capital out there and it's also as competitive it's been. So it definitely translates that because there is more supply that it will lead to more near term deployment of capital, because we're going to be disciplined. And coming back to Cherilyn's comment about where we are in cycle, there may be some good opportunities ahead of us if we’re patience. As far as where we're focused on opportunities, I think pretty broad based. We're clearly focused in the telecom sector in the United States. We've got number of things that are actual in the near term, still lots of telecom activity in Europe. And we’re involved in situations there. And of course we continue to monitor some interesting situations in India and into Asia. So that sector is very good. On the transportation side, we're continuing to look to build out our toll road business in India. There are a number of privatizations underway in that country that we think we’re placed on. And so that's exciting. There’s also a number of other ports and general infrastructure opportunities in United States that we are monitoring and are involved with. And so again, I’d say those -- the activity level there is quite high. So hopefully that gives you a sense of -- I would say transportation and telecom are the two sectors. And regionally, it’s North America, Europe and Asia.

Could you provide some color on the impacts from the U.S. tax law changes on your existing investments? And do these tax reforms change the way you think about future investments in the U.S.?

The three key changes with respect to the tax bill that was signed into law, obviously relates to reduction in corporate tax rates. There is changes with respect to debt limit interest deductibility to 30% of EBITDA. And third, just again changes with respect to how much of deduction you get for you capital investments, et cetera. Given the size of our business today in the United States, we don’t see the changes having a material impact to BIP. So I would classify them as the whole tax reform as neutral to slightly positive, especially in light of the fact that the two last changes I noted are irrelevant for rate regulated businesses. So to the extent that we, for future investments, if we make investments in assets that are not rate regulated, we potentially benefit from these tax reform definitely but for our existing business today, I would say the impact would be pretty small.

Your next question comes from Andrew Kuske with Credit Suisse. Your line is open.

The question really relates to some of the near-term equity volatility we've seen, and clearly that volatility you guys are balancing of art, science and a healthy dose of emotion as it relates to valuation of broad markets. But when you at BIP and your business, you clearly have a lot of capital deployment opportunities. Has there been any structural change from a funding prospective that you’re seeing in a market basis? And clearly from your results and the commentary, a lot of your underlying operations seem to be working extremely well at this stage with specific growth, especially in the emerging market businesses. So maybe just some commentary on what you're seeing from the funding markets in relation to the equity valuations just broadly.

I guess at the asset level, access to debt capital around the world still very strong. So we're not seeing anything in the credit market that give us concern. In fact, there’s even throughout the volatility in the first half of first month of in a bit of the year, the credit markets are still very good and all the initiatives that we have underway are progressing and seem to be going well. So that’s very positive. In relation to investor reaction it’s still too early to tell. I can’t say we’ve seen any notable changes in the private equity markets as far as people competing against us and how they’re thinking about valuations and pricing their cost of capital. So time will tell. I think this is still in the early innings. So we’ll see if this is a long-term pullback or that might impact people’s views or if it’s just a short term blip. And as it relates to us, as Bahir mentioned in his remarks, we had a strategy for 10 years, which is whole balance of being opportunistic in the capital markets with debt preferred and common equity. We’ve continued to recycle assets and we probably are inching a period of maybe recycling more assets even than we have in the past. And of course maintain a low PR ratio so we can retain some cash flow. So that balanced approached we’ll just keep with and it should serve us well for whatever markets are ahead.

And then perhaps as a follow up, one when we look at the distribution growth that you posted this year, the 8% increase from the prior year. Obviously, that’s still a good number, down from the historical averages, which was extremely good. Do you look at the current market situation as higher growth dividend payers and dividend growers are necessarily being rewarded? And given the capital backlog you have organically and the M&A opportunities, and then I heard you comments on the capital recycling, it’s just more prudent at this stage in time to effectively keep that capital on your balance sheet as opposed to keeping a double-digit distribution growth.

As we look at it, we didn’t think -- there is not magic to keeping our double-digit growth in perpetuate. I think the way we think of it is, let’s obviously be conserved in retaining cash when we have lot of projects in front of us. We can stay conservative in our payout ratio. And to the extent that we are very successful in deploying capital, if it means doing a midyear adjustment to our distributions then we can always do that. We’ve done that in the past. So this would not be the first time that we have come out with an 8% distribution at the beginning year and then update during the year. So I think we’ll just wait and see how things unfold. And I think we’re just doing what we’ve done in the past and see if there is any changes how we’re thinking about that.

[Operator Instructions] Your next question comes from Robert Kwan with RBC Capital Markets. Your line is open.

If I can maybe just start and follow-on on your last answer there, Sam. With respect to the lower distribution growth, is it more like directionally, is there a strategic change within the organization to try to retain more cash in addition to upping the capital recycling to keep more of the funding in-house or what's the decision more around the 8% that other piece of being conservative around just matching it more with the timing of deploying the cash, whether that's in the acquisitions or otherwise?

So when you mean organization, are you at this time of BIP or you're referring more broadly there, I wasn’t…

BIP, yes.

Now look, I think the main driver was just we want to be patient and disciplined in how we use that capital. And today, we will have a significant amount of liquidity on the balance sheet at the corporate level. And we're just not sure if we could deploy capital. There are situations it happened very quickly, or if we don’t get the right values then we may chose to hold on to it for a bit. And so we just felt that to the extent that we are conservative or be too conservative, as I said in my last answer, we can always make adjustments, if things play out faster and more positive than our conservative outlook. So I think we just felt good with this number. We didn’t feel we needed to come out with a higher growth rate but we will see how the year progresses.

So is it fair to say it's probably more about timing than it has been a strategic shift to on more internally?

Yes, I think it's probably more of that.

When you look at the organic program and continues to build with the uptick in the backlog this quarter with the smart meters, especially. Just wondering as that's unfolded, if you just maintain the backlog and keep it flat where it is. How does that position you with respect to the 6% to 9% long-term FFO per unit growth target or specifically the non-inflationary non-GDP wage that you previously led out?

So you are referring to the last bucket of, just to be clear, the [2% to 3%]?

Yes, the [$2 million to $3 million] for cash flows reinvestment like in terms of what you have underlying if you set the backlog flat. Would you be above that, i.e. you've got more backlog than you might think about long-term relative to size of the overall organization?

So this 6 to 9 doesn’t require new capital so then anything over and that's basically investing 20% of our 15% to 20% of our cash flows that we retain. But at the elevated levels of backlog, we will do much better than the 6 to 9, at least be on the higher end and then potentially outperform. But then it’s tough to take into account the cost of that capital that we put into the businesses. So it's not -- the trajectory is not going to be off the charts here. So I would say for the next sort of while, we would forecast and just leave currencies aside for a sec, 10% to 11% growth is something that we feel pretty comfortable with.

With strong visibility, just given the backlog to secure investment number?

That’s correct.

So if I can just finish with the comment you had on some of the increasing credit quality, your customers and the increased enquires you're getting from them. Wondering just when you’ve looked at the past cycle and how is your approach going to change as you go forward with respect to new contracting, whether that’d be increased expected returns or more contract structuring given some of the past experience you’ve had with some of these customers on the way down, things like iron ore.

I think generally our experience has been quite favorable. Even with the one customer that we gave some concession to was pretty remarkable circumstances. And the reality is we haven't in fact given much concessions because the price rebounded very quickly and it’s been almost to nothing. But we had -- we really protected ourselves well in relation to having the minimum volumes, as well as the protection in the dire situation. We had $300 million of bank guarantees that really covers the investments that we make. So I feel that in that particular case you’re referencing it was probably very well structured. And in the three or four -- probably four or five years now that’s been running, we’ve already made our money back. So it’s a fantastic investment. I think going forward we’ll continue to look to secure contracts with solid counterparties. And to extent that -- and sure about their credit quality, we will get some bank protection as well. So approach is the same and I don’t see this cycle being any different than last cycle.

Your next question comes from Rupert Merer with National Bank. Your line is open.

Looking at the divestiture of Transelec, how should we think about the headwind to FFO from that sale this year? And if you’re looking at potentially more recycling opportunities, do you have any concern on potential FFO drag this year on the timing of redeployment of that capital?

So Transelec typically generates anywhere between $75 million to $80 million of FFO or $65 million to $70 million of AFFO. So that would be -- call it impact on our results --on an annualize basis. And so that would be the impact. With respect to impact on our overall results, it’s all dependent again back to Sam’s earlier remarks that it’s dependent on how fast we deploy that capital. We feel pretty good that with a lot of visibility with respect to the organic growth that’s going to come online, there could be dilution as a result of the sale of Transelec no different than with equity offering proceeds that we are currently have on the balance sheet today. But we feel pretty good that we’ve got sufficient enough organic growth to give us a lot of -- with good visibility on that, to give us a lot of flexibility into our results going into the New Year and into 2018 and beyond. So yes hopefully that’s helps.

Maybe I’d add one thing. I guess what we’re confident on and the whole reason for doing scale is that the net proceeds that we received from the sale of Transelec we’re highly confident that we will reinvest at higher returns than what we sold at. So while there may be some period of time when it sits in our balance sheet and that’s obviously dilutive, as Bahir just said, we don’t think that’ll be too long. But irrespective of whether that’s six months or three months or a year whatever, on a long-term basis, that capital that we just surfaced will be accretively deploy. So that will be better off than we were ahead of time. That’s the main takeaway.

And secondly, your communications infrastructure business, the results were relatively flat year-over-year. I was interested in the letter to unitholders you highlighted that data volumes in France actually doubled year-over-year. Can you talk a little bit in detail about how that business is structured with its capacity utilization today and the contracts? And is there a point where that scale of volume increase translates into increased capital deployment or increased returns on capital?

The business model there, putting aside the fiber-to-the-home business. But in relation to the tower business, we don’t have a direct impact to our results from data usage. What happens is we obviously provide the infrastructure to towers and they’re rented on long-term basis. And where we make more money is to extent that there is higher data usage than the tower operators typically need to add more equipment to the existing towers or they need new towers. And so we usually call these points of presence and every year we have more points of presence coming on to the business, because either we’re increasing a collocation on our existing towers or we’re providing new towers to the business -- to the customers. And so that’s sort of as a relationship with data usage and that we see no change in the direction of that dynamic in the near-term. It’s just there is more and more data and so we expect more and more deification of our system going forward.

Is it going to translate into increased organic growth potential capital deployment…

Absolutely, yes it does.

Just with respect to the results, in local currency, we actually achieved a good amount of growth but that was offset a little bit by foreign exchange. So in local currency terms, we are seeing some good steady progress in that business. And we've yet to commission some of the growth projects that we've eluted to. So there is a good amount of backlog here which will be coming online in the next couple of years. That being said, the business today is also performing pretty well.

This concludes the question-and-answer session. I’ll now hand the call back over to Mr. Pollock for closing comments.

Okay, well thank you, operator. And thank you to everyone who joined us for the call this morning. We hope you have a great rest of the winter, and we look forward to updating you on our progress next quarter. Good bye.

This concludes today’s conference call. You may now disconnect.