Good morning, ladies and gentlemen. My name is Susan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Brookfield Infrastructure Partners Q2 Earnings Call. [Operator Instructions] I would now like to turn the call over to Rene Lubianski, Senior Vice President, Corporate Development. Please begin.

Thank you, operator, and good morning everyone. Thank you for joining us for Brookfield Infrastructure Partners’ second quarter earnings conference call for 2018. On the call today is Bahir Manios, Chief Financial Officer; and Sam Pollock, Chief Executive Officer. We also are joined by Roberto-Marcogliese, Deputy CIO of Data Infrastructure. Following their remarks, we look forward to taking your questions and comments. At this time, I'd like remind you 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 website. With that, I'll turn the call over to Bahir.

Great. Thank you, Rene, and good morning, everyone. This morning Brookfield Infrastructure reported solid results for the second quarter of 2018 as we generated funds from operations or FFO of $294 million, or $0.75 on a per unit basis. While FFO benefited from another period of solid organic growth, this quarter’s results were impacted by the loss of income associated with the sale of assets and the time required to redeploy those significant proceeds into new investments. As this happens, our payout ratio is expected to return to our target levels over the next few quarters. We continue to execute on our strategy to constantly be positioning this business for long-term growth. During the quarter, we progressed a number of investment initiatives and we currently have an advanced pipeline of investment opportunities totaling approximately $1.7 billion of which approximately $1.3 billion has been year-marked for three recently announced transactions that will expand our energy and data infrastructure operating groups. Sam will speak to these investments in more detail later in the call. These new investments coupled with the strong backlog of capital projects we have across our operating groups should allows us to meaningfully grow our cash flows in the years ahead. Funding for these investments will come from almost $4 billion of liquidity that currently sits on our balance sheet as at period end. I’ll now spend some time and walk you through our financial results both on an overall basis, as well as on a segmented basis and also provide some key operational updates that relate to a number of our operating groups. Overall, our FFO in the period was $294 million, which benefited from organic growth of 8% on a comparable basis to 2017, as well as contributions from new investments. Our FFO was reduced by approximately…

Great. Thank you, Bahir, and good morning everyone. I'm going to take a few minutes to provide an update on the strategic initiatives we have underway, all of which we are very excited about. And then I’ll provide a different outlook for the business in the current economic environment. It has been a very active and successful period for advancing several investment initiatives. Our current pipeline of advanced transactions totals approximately $1.7 billion. We have signed binding agreements for three opportunities, representing $1.3 billion, and we have a further $400 million of initiatives under exclusivity, and in the final stages of due diligence. Our primary objective is to invest globally at the best risk-adjusted returns, meaning we are typically agnostic about our geographic mix of assets. However, we are pleased to have recently secured three large scale North American investments: a U.S. Data Center Business, a Western Canadian Midstream Business and a North American Residential Energy Infrastructure Business. I’ll describe all three of those momentarily. These investments are the outcome of substantial efforts to focus specifically on the data infrastructure and energy sectors, respectively, where we have recently been absorbing good value opportunities in the market. Another contributing factor to our success has been the ability to apply our expertise in executing “carve out” transactions. In the cast of the data center and mid-stream businesses we are acquiring assets from large industrial companies. While these companies do not consider these businesses to be strategic to them, we are excited about the potential to own and operate them. Although each of the businesses has its own distinct investment attributes, more broadly we like carve out transactions for the following reasons. First, carve out transactions tend to attract few financial investors and therefore valuations are generally less robust. This is normally the case because there is additional complexity in evaluating assets that need to be separated from a larger concern and often there is a requirement to bring new management into the business. Many financial investors do not have this capability or interests. Also, businesses that are deemed non-core by large companies may receive less management attention and capital resources and thus a new owner with expertise and financial resources can add significant value. Lastly, we believe that businesses that are run in a decentralized manner by highly motivated and accountable executives can create value through close attention to margins and customer needs. So now, I’m going to take a bit of a break and I’m going to turn the call over to our guest speaker this quarter, Rob-Marcogliese, and his is our Deputy Chief Information Officer for Data Infrastructure. And what I’ve asked him to do is to discuss what we are seeing in Data Infrastructure sector and more specifically to talk about our recent U.S. Data Center acquisition. And then I’ll come back and I’ll talk about two recent energy investments. So, with that, I’ll turn over to Rob.

Great. Thank you, Sam and good morning everyone. As you may recall, during the 2017 Investor Day presentation, we identified the exponential growth in data usage worldwide as a significant opportunity for us. In particular, the opportunities around the large-scale infrastructure investments that will be required to support the transportation and storage of this data like any other commodity. Over the last few years, we have made several investments in data infrastructure assets, primarily to support the transportation of data. Our U.K. regulated distribution business is deploying fibre-to-the-home or FTTH networks as part of its multi-utility offering and in response to customers demand for faster and more reliable product executions. Meanwhile, our French data infrastructure business is the leading independent broadcast and telecom tower operator in France, with over 7,000 towers in active [indiscernible]. This is currently rolling out core fibre-to-the-home networks as per the French government's broadband plan, which will seek to connect over 7,000 households in the next few years. During the quarter, we reached a significant milestone by broadening our existing data infrastructure sector exposure into the data storage segment. In June, we signed an agreement to acquire 100% of our portfolio of data centers of AT&T or $1.1 billion or 560 million equity, of which BIP's share would be approximately [160 million]. We have been evaluating the date center sector for some time now, and we believe we have found a scalable business at an attractive [indiscernible]. The transaction is a carve out from AT&T, which requires us to assemble an experienced management team and dedicated sales function. We believe this complexity allowed us to buy the business at an [indiscernible] entry point, especially relative to recently announced transactions in the business segment that did not have similar [indiscernible]. The business was no longer core to…

Thanks Rob. So, now let’s move on to our other investments in the quarter. In July, we entered into a definitive agreement to acquire 100% of Enbridge’s Western Canadian natural gas gathering and processing business for about $3.3 billion, with a total equity investment of about $1.8 billion, and approximately $540 million of that will be funded by BIP. This business is the largest independent operation of its kind in Canada, it’s strategically positioned for continued development of what we think as the prolific, the largely untapped Montney region of British Columbia and Alberta. The business is comprised of 19 natural gas processing facilities with total operating processing capacity of 3.3 bcf/d and over 3,500 kilometers of gathering pipelines. It is well connected to major demand markets, including the U.S. Pacific Northwest, U.S. Midwest and Alberta, giving producers multiple egress options. Over 85% of 2018’s revenue is comprised of fee-based take-or-pay contracts and it has a weighted average remaining contract life of 10 years. This business is an ideal platform to establish our midstream presence in Canada, as it is competitively positioned for growth given the highly economic acreage throughout the Montney region. We believe the region’s massive scale and low breakeven costs will ensure that it continues to be a focal point for development by top tier producers with over 40 years of anticipated economic drilling inventory at current price levels. Production in the Montney is anticipated to grow by approximately 20% plus over the next 7 to 10 years and we believe the catchment area of the business overlies more than 35,000 potential future wells, representing approximately 60% of the region’s gas resources. This transaction is expected to close in two stages, due to separate provincial and federal approval processes. Closing for the provincially regulated business, comprising about…

Thank you, very much. [Operator Instructions] Your first question comes from the line of Dennis Coleman from Bank of America Merrill Lynch. Your line is open.

Yes, hi, good morning. Just wanted to ask a little bit about the acquisition from yesterday, so you are viewing this as more of something that came to your UK business not the district energy business? Is that correct?

Hi, Dennis. This is Sam here. Yes, I would describe this as having more similarities to our U.K. business in the sense that you know most of what we provide in our U.K. businesses are services to households where we provide electricity gas, water, and fibre connections. We have a retail facing component there where we interact with customers, we build them directly in some cases for fibre and water. We have a number of service technicians that deal with that business and it’s a large book of annuity-like cash flow. Now, in the case of the U.K. business, it’s a regulated cash flow stream. The only difference with the Enercare Business here in Canada, United States is that it is an unregulated book of business. So, it has very long-term cash flows that are very predictable and as we mentioned the business has been around for 50 years, but the only difference is, it is an unregulated cash flow stream, whereas our U.K. businesses is a regulated cash flow stream.

Okay. So, you talked about some synergies or perhaps ways to capitalize it with some of your other assets, would sort of the energy model be part of that or can you expand on what you mean by some of those other areas?

Yes. Again, our district energy business here in North America is more of a B2B business. So, we generally connect various buildings and institutional properties into our systems whether it be here in Toronto or in Boston Huston or other parts in the United States. Whereas the types of businesses that we believe it is a leverage to grow the Enercare business will likely be some of the utility companies that we’re associated with. One in particular, district energy in the United States has a very large retail business with close to $3 million residential customers and we feel that there could be a great opportunity to work with them in a synergistic fashion to tap into this customer base to drive more sales. So that would be one that’s very exciting and one that, you know once the transaction closes, you know we hope to engage in discussions with them. In addition, there is a relatively small, but we think a very quick fast-growing business, the submetering business that Enercare owns that we’re hoping we can leverage our condominium services business that we own in Brookfield, and our large multi-family presence across North America that we can drive more sales to that submetering business. And then of course, we have a large residential home-building business and may the leads and adoptions that come from the home builders in Enercare business, you know obviously we hope to increase the market share that we get from the Brookfield related companies – home-building companies. So, that’s kind of a strategy, it’s much less focused on the district energy side and more on those types of businesses.

Great. That’s helpful. Switching gears, a little bit to the Canadian midstream, I wonder if you might just talk a little bit about your natural gas outlook for North America there, obviously that’s a key point and you mentioned the economics of the Montney gas, can you talk about breakeven and maybe talk about how you think about the longer-term outlook for natural gas in North America because clearly that underlies this investment.

Yes, so, look our – I’ll try and build that in the two-pronged fashion. First, our existing business NGPL that we own is Kinder Morgan in the U.S. has been performing exceptionally well with the significant demand in the in the Gulf Coast from LNG and sales into Mexico. We’ve been able to secure a number of take-or-pay contracts to drive volumes down there and we just see that continuing. So, we are very optimistic they will continue to grow our transportation volumes on that system over the next couple of years and continue to see growth that. We see very similar dynamics in Western Canada. I think the enthusiasm and the excitement around the potential announcement of Shell’s LNG facility going FIB sometime this summer in the fall has built up quite a bit. We share their enthusiasm that that facility will get going. We think there is lots of support by the government out there, as well as many of the local constituents. In addition to that, we think there is other West Coast LNG facility that could be built in the United States, which we all be very positive to the Montney, which is one of the lowest cost regions in North America. Today, even at gas prices at AECO, which are I think at the $1.50. This region is extremely economic. We think that in fact the economics in Montney could improve, even more so because generally the technological improvements that had come with Shell in Canada tend to be a couple of seasons behind, and so we think that there could be even greater productivity brought to that region that will reduce those costs. And so, we think the outlook for gas production in that region is very robust. There will be lots of take away capacity from LNG, and so we're big bulls on the sector.

That's great. Very helpful. Last one from me, just on the – going back to the third acquisition the data centers, can you talk about sort of growth profiles from here that you had a five-year target of growing the sort of the telecom data sector quite significantly relative to the rest of your portfolio, how should we think about the growth in the data centers here as part of that?

Rob, do you want to – as our guest speaker, would you like to speak through this, or would you want me to answer it?

Sure. I want to make sure I hear you speaking specifically about the AT&T acquisition or the broader plan for the platform [ph]?

It’s a little of both Rob, please.

Okay. So, starting with the – on the AT&T side, obviously, the plan there is to grow this and it’s kind of fitting in the new management team and a dedicated sales team that would focus on it. I think there is a number of key growth areas given where the portfolio is responding across the U.S. And so, I think generally speaking on the collocation, retail collocation side of the business, the growth over the next 5, 6 years is supposed to be sort of in the kind of high single digits and that’s again largely driven by two key factors, which is more companies will continue to outsource and growing workloads. In terms of our strategy for the business, with this up from now, we think there is going to be lots of tuck-in opportunities and were also I would say, looking at the other segments as well. So, we continue to look for our acquisition, as well as looking to deploy more capital into the fibre-to-the-home of the fibre business. So, not sure exactly where that will lead to over the next five years, but there is lots of opportunities that we're looking at, and there are a few opportunities that we’re currently looking at right now, which hopefully we will be able to announced in the not too distant future.

Great, thanks Rob.

Okay. That's it from me. Thank you.

Okay, thank you.

And your next question comes from the line of Robert Catellier of CIBC Capital Markets. Please go ahead, your line is open.

Hi, thank you very much for that extensive review of the data center business, but a similar question, just when you're looking at the growth what are the aspirational dollars there in terms of the amount of capital you can be deployed, just trying to get a feel, it sounds like you're both organically growing and growing through capital, but just trying to get a feel what those dollars might be in the capital deployment side?

Well maybe I’ll tackle that. So, and again we won’t – I won't deal specifically with AT&T, but more just broadly on data infrastructure. Look, I think our goal would be in the next 12 months to invest probably $500 million from a BIP share perspective into data infrastructure, and then probably over time ramping up from there, but I would say today, probably a higher percentage of our investments are going towards data infrastructure and energy in the next little while. That would be consistent with how our pipeline currently looks.

Okay. You gave the impact of the capital recycling direct from the Transelec sale, I think it was 31 million FFO per quarter, as you look to monetizing on the – I think you said 1 billion over the next 6 months to 12 months, how should we look at the FFO drive from that, should we just take a proportionate view?

Hi Rob. It’s Bahir. So, the FFO yield that would be coming or the FFO that would be coming out of our results once those transactions hopefully get completed would also be in the sort of the mid-to-high single digits as well. These are mature businesses that command a premium type evaluation.

Okay. And then my last question really has to do with the capital allocation strategy. You have increasingly invested in North America recently, and the OECD status in some Latin American countries, tightening interest rate differentials – is that – like, which of those two is driving the capital allocation dollars, is it just your targeting data centers and energy infrastructure, or is it the fact that maybe Latin America has become more competitive as the economies improve and mature?

Yes. I'm not sure I would draw any conclusion necessarily from our recent activities about Latin America. I think we still see lots of interesting opportunities down there, and hope to be able to announce other transactions in that region in the not-too-distant future. But I think, what you can draw is that we’ve recently been successful in identifying opportunities in North America that kind of fit our warehouse businesses that we felt were suited to us where we could drive additional value, and where we could be not only competitive, but excited about the opportunities. So, I don't know if that’s a necessarily, something that will replicate many times over the next 12 months, 24 months. These where unique situations, but surprised to say that we have investment teams across the world looking at opportunities and we see interesting opportunities in all those markets and sometimes it just depends on specific circumstances why some proceed and others don't. And as I mentioned in my remarks, you know, we’re somewhat agnostic around where we invest, as long as we get the best risk-adjusted returns.

Okay. And then just if I can have one more here, just with the Enbridge midstream acquisition, you referenced LNG, which can benefit the region, but just as you look at longer term, does the company have an appetite for making LNG investments, you know, obviously I mean the ones that are just going off idea have a long construction cycle are different, but in terms of a mature operating LNG plant, is that something that fits within the company's wheelhouse?

It could. I think again, it depends on specific situation. If we can get the proper returns, we would definitely look at it.

Okay. Thanks very much guys.

Great. Thank you.

And your next question comes from the line of Andrew Kuske of Credit Suisse. Your line is open.

Good morning. I think the question is probably for Sam, and it’s about the velocity of capital that flows through BIP and when you think about BIP-1 coming to maturity in a couple of years, probably raising capital for BIP-4, maybe later this year or early next year depending on deployment. So, how do you just think about the dollar value of capital opportunities and things you need to recycle slowing through BIP from a personal standpoint and just managing all of that?

Okay. Hi, Andrew. So, just so I get the question correct. Are you speaking more from a human resource perspective or a capital perspective?

Well it is a little bit of both. Obviously, you’ve got a body count to deal with, searching out opportunities and deploying the capital. But the dollar value that you’re going to have to monetize or prospectively monetize and then also deploy is just growing in size and scope.

Okay. Well, I will give my best answer. I would say, and I think I’ve mentioned this on past calls as well that we are evolving to a state where the amount of realizations is gradually matching the amount of capital that we are deploying. So, in our early years of operation, you know the business was ramping up quite a bit and the investments were obviously in an early stage. So, we weren't realizing all that many. Today, as you pointed out, investments that we made from the Babcock transaction and early on in BIP-1, you know are becoming mature and we are looking to realize on those. We expect that that will be a significant component of our funding of future investments as we go forward. And we can already, in our own minds see, which business we will likely bring to market over the next 2 years to 3 years. So, from that perspective, internally we have a good visibility on that capital recycling program. As it relates to personnel, we have matched the growth in the business with growth of people in. So, today in the infrastructure group more broadly we have over 200 people dedicated to the business in all regions that we operate in, and so we feel that we’re in great position to not only find new investments, which I think we’ve demonstrated that, but also to manage the businesses, which is led by Ben Vaughan and part of his team's mandate is also to realize on those investments when we determine time to sell. So, I would say from a HR perspective, we have probably one of the largest groups in infrastructure around the world, if not the largest, and we feel like we can execute this plan quite well.

That’s helpful and then maybe just one minor extension, does BIP get to the point within a specific asset class, really in terms of size and maturity that you contemplate? Effectively spinning out the underlying business and have it as a standalone entity?

That’s interesting. Yes, we’ve had that debate over the years. I think that it’s possible at some point we get to that stage. I think the things we’d have to consider is weighing – the benefits of providing a – more of a pure play growth opportunity for investors against what we might lose on a cost of capital raising perspective. Today, BIP has a great credit rating with the diversity we have in the cash flows, and as that continues to grow it is just helping our ratings and makes it very easy for us to raise capital. And so, we might lose a little bit of that if we spun out a significant decision. So, we have to wait those factors today. We’re not contemplating anything, but you raised a good idea and something that the board always things about.

Okay. That's helpful. Thank you.

And your next question comes from the line of Robert Kwan of RBC Capital Markets. Please go ahead. Your line is open.

Hi, good morning. Just starting on data centers and in some ways, maybe the answer's been out there. Just in terms of where you're seeing the greatest opportunities, there was a lot of discussion on rollups. Is there a role for any larger acquisitions? And then should we expect to see a material addition to your backlog profile for any greenfield or brownfield type expansion activity?

Maybe, I’ll tackle that one Rob, you jump in if I miss anything. On your last question, Robert, it’s probably a little premature to talk about the implications on the backlog. I think we need to get into the business and even though there is – even though we haven’t closed on the transaction the number of tuck-in opportunities that we have for the business is quite remarkable. So that’s surely has surprised us, how quickly they have to come up, but it’s hard to say just how quickly or what the impact would be on the backlog. I think we’ll add to this sector in relatively short order. So, I think you’ll be surprised how we grow this business, and in some meaningful transactions. So, not all and will necessarily be plugged into the AT&T platform, it’s possible that we will have in other regions, other types of businesses and positive partners. So, I think we will take a multifaceted approach in how we grow this business.

Okay. And just as part of the explanation around the AT&T business, I can’t remember the percentage, but it sounded like a large percentage of the customers own their own equipment, which reduces or eliminates your technology risk, as you – as we think about kind of what you might want to do in this segment in the future, was that a key part of the attractiveness of the assets, and something that you absolutely want to see going forward or was it just something that was nice as part of the AT&T deal?

Yes, sure. I guess in kind of the way we are looking at the space, they are just obviously different opportunities and different strategies that we can employ. Certainly, the data centers may have more of a service feel or managed hosting, in. which case oftentimes the data center will actually own the equipment. That’s not a space that we’re looking at right now. We're really focusing effectively owning what I call it the building and the HVAC coolant systems and the HVAC and really providing that space to customers who will then install their own servers and IT equipment. So, I think that sort of holds very true for both the retail collocation part of the business, and for moving on the wholesalers should have a bigger hyperscale and so these individuals these customers are usually installed on their own equipment, and there is very little, there is some service element that retail collocation will provide, but the equipment is really owned by end-customer. So, it is not really, I wouldn't say it is unique of the AT&T that is actually the model for retail collocation.

Got it. And then just keeping with data infrastructure, can you just provide an update on the outlook for acquisition potential on the tower side of things, there has been a couple or multiple things that you have been chasing that did not come to fruition, has that kind of gone to the back burner or is it something that you are still actively pursuing?

Yes. You know, there’s obviously been lots of transactions that have occurred in the European market, a number of which we have taking a look at and some of them obviously in our own backyard. I guess in terms of the prospect going forward, it’s definitely high on our list of acquisition target, but I would say right now, probably the biggest opportunities for us are really on the fibre side of the business and on the data center side. But obviously, we like the fundamentals for the tower market, and we continue to look for those opportunities across the globe.

Got it. And if I can just finish with the Western Canadian midstream side, Sam you talked about establishing your midstream business in Western Canada, and so when you think about growing that, again where are you seeing the most likely investment opportunities going forward? Is that kind of bolt-on acquisitions or do you expect it’s going to be more organic greenfield, brownfield backlog activities or last you see the potential for larger transactions?

Well look we will consider all three of those things you mentioned. I think initially, as we think about our business plan for the company, it has been mostly around the organic opportunities. We think that the two areas that Enbridge maybe has not been as focused, as maybe we would be, one would be exploring some of liquids opportunities around the assets. So, that’s something that as we put in our new management team, we’ll definitely focus on. And then I think, we’ll probably be, maybe less stringent as Enbridge was as related to deploying capital into the region where they were probably more focused because, look they are a large interstate type company and used to be dealing with long-term contracts on take-or-pay basis. They probably weren't fixated on those types of contractual relationship with customers. We’ll probably be prepared to take maybe some shorter-term take-or-pay contracts and the sharing arrangements on some of the back-end production risk, and so we think that could drive lots of investment opportunities.

Got it. And just Sam, you talked about liquids opportunities, is that more investment in the existing plans to improve the liquids or are you looking at liquids egress options?

Yes, the latter, I think.

Okay, that’s great. Thanks very much.

Thank you. And your next question comes from the line of Frederic Bastien from Raymond James. Your line is open.

I was wondering if you could provide examples of certain levers, you believe you could pull across the Brookfield platform to grow the Enercare business?

Hi, Frederic. Yes, I’d be happy to do that. I probably touched on it a little bit earlier on, but I am happy to may be restate them a little bit more clearly, but we think that there are probably four businesses that we can tap into that can really help the business, and probably the largest one relates to the Vistra entity that we're involved with the United States. This is a large retail power business based in Texas. They have over 3 million residential commercial customers, and our HVAC business in – I shouldn't say ours yet; it's not ours yet – but the Enercare HVAC business is based out of Texas as well, and one of the opportunities is to obviously tap into extent possible the customer base that this utility has and establishing some joint venture where we could share in the prospects of a rolling out the Enercare type business to this customer base. It is very under penetrated today in the United States and to the extent that we can accelerate that through that channel that would be a huge home-run. In addition to that, I mentioned there is a submetering business within Enercare, within our multifamily operations across North America, as well as our condominium services business. We should be able to access customers there and roll-out the submetering services. And then lastly the Brookfield homebuilding business is quite large across North America and accessing opportunities to provide water heaters and HVAC systems to that company to then adopt the residential customer. Again, it could be very added to the business. So, that’s something that today they are already a customer, but we don't have probably as much market share of the Brookfield's business as we could have. So, some respects that very similar to the district energy business where we were able to increase the market share that we had with Brookfield Properties on that business. So that would be it Frederic.

Awesome. Thanks, and that’s super helpful. I have a last one here, you hinted at another 400 million bucks of potential investments. For which you’re in exclusive negotiations, are you able to provide a bit more color on those or wondering what sector these investments might be in?

Sure. I think, I would be comfortable to stay at this stage is opportunities are in the data infrastructure and energy sectors and that we are hopeful that we will have both transactions closed before the end of the month.

Okay. So…

Not closed, signed by the end of the month.

Okay. So, consistent with what you have been achieving recently. Thanks. Awesome.

Great. Thank you very much.

And thank you very much everyone. I’d like to turn the call back over to Sam Pollock for his closing remarks.

Okay. Well, thank you operator. And, I would like to thank everyone for joining the call this morning. I appreciate your patience. I know it was a longer call than usual. We're looking forward to updating you on our progress next quarter, and for some of you we hope to see you at our Annual Investor Day in New York in September. And on behalf of the management team, we hope you enjoy the rest of your summer. Thank you.

And this concludes today's conference call. You may now disconnect.