Good day, ladies and gentlemen. And welcome to the Brookfield Infrastructure’s First Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today’s conference, Melissa Low. You may begin.

Thank you, Operator, and good morning. Thank you all for joining us for Brookfield Infrastructure Partners’ first quarter earnings conference call for 2019. On the call today is Sam Pollock, our Chief Executive Officer; Bahir Manios, our Chief Financial Officer; and Ben Vaughan, our Chief Operating 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 website. With that, I’d like to turn the call over to Bahir.

Great. Thank you, Melissa, and good morning, everyone. I am pleased this morning to discuss our results of operations for the quarter and provide you an update on our liquidity position. So first just on our results, we are off to a strong start in 2019. We generated funds from operations or FFO of $351 million for the quarter or $0.88 on a per unit basis and that’s up from $333 million in the prior year. On a per unit basis, our results were up 4% compared to the prior year and our payout ratio for the period was 71% after taking into account our recent 7% distribution increase. Results for the quarter reflects strong performance by each one of our operating segments, which in total delivered 10% organic growth over 2018, exceeding our annual long-term target range of 6% to 9%. Organic growth was generated by inflation indexation across approximately 75% of our business, solid GDP driven volume growth predominantly at our transport operations and contributions from accretive capital projects commissioned during the period. Our results also benefited from contributions from our recently acquired businesses. These positive factors were partially offset by the impact of a weaker Brazilian real, which reduced earnings by $13 million in the quarter. Our Utilities segment contributed to FFO of $137 million compared to $169 million in the prior year. Underlying performance was strong as our operating groups were able to grow their results by 5% on a same store basis over the prior year. This was predominantly driven by inflationary increases to our rate base, combined with another strong quarter of results at our U.K.-regulated distribution business. These contributions were offset by us having less capital, invested following the sale of our Chilean Electricity Transmission business in March of last year. Higher interest…

Thank you, Bahir, and good morning, everyone. For my remarks today, I will begin by providing a brief update on our various strategic initiatives. I will follow that with some comments on our current activities and thinking regarding the data infrastructure sector, and lastly, I will conclude the call with an overall outlook for the business. With respect to our current strategic initiatives, I am pleased to report that we have nearly concluded the process of closing our various acquisitions from 2018. Over the last several weeks, we closed the acquisition of a 2000-kilometer Indian natural gas pipeline and an interest in a large scale, South American data center business. We are happy with these transactions and are progressing well on the 100-day integration plans for both businesses. We invested about $230 million into our Indian pipeline and $200 million per our share of Ascenty, the South American data center business, which included funding for Ascenty’s 2019 growth capital expenditures. Staying on Ascenty, since closing the transaction, the business has expanded recently into Chile leasing 6 megawatts of capacity over the next 10 years to an investment grade customer. This anchored contract will facilitate the constructions facility, which is an accretive initiative that was not contemplated in our original business plan. The business is performing well, our partnership with Digital Realty Trust is generating the desired synergistic benefits we expected and we are identifying other tuck-in opportunities that will grow Ascenty’s presence across South America. The last investment from our 2018 transaction pipeline we need to close is the acquisition of the federally regulated assets in our Western Canadian Midstream business. We expect this to happen in the third quarter of 2019 upon completion of a regulatory process. Turning now to Data Infrastructure. This sector continues to offer interesting investment…

Thank you. [Operator Instructions] Our first question comes from Rupert Merer with National Bank Financial. Your line is now open.

Good morning, everyone.

Good morning, Rupert.

Good morning, Rupert.

So with your focus on data infrastructure today maybe I will start there. In your North American Residential Energy business, it sounds like you have a growing opportunity in smart home technology. Is there any potential overlap in your communication data infrastructure here?

Yeah. I would say initially that’s not the strategy really to leverage across the data center or fiber type businesses that we might be looking at and the smart home services. So in the future that could come about, but at this point, there really isn’t an interlinking between those two strategies across those businesses.

All right. And moving on then, so looking at the strength you had in the Energy business this last quarter, it seemed like a good deal of strengths came from a cold winter. Can you talk about the seasonality of the business today and how that’s changed versus the historical seasonality patterns we have witnessed and how much of a contribution to that the FFO this quarter came from your gas storage business?

Hi, Rupert. It’s Bahir. Maybe I will start off on that one. So there is a bit of a seasonal impact today in this segment albeit exactly to your point, that has been reduced over the years as our North American Pipeline business has become much more of a contracted utility like business. That being said, a portion of those FFO streams coming out of that business in addition to our gas storage business do experience some seasonality. I’d say, Q1 and Q4 are typically our strongest quarters in this segment and just for this quarter, yes, we did have a very strong quarter. It was aided by cold weather conditions that created higher volatility in gas spreads. And we did pick up that benefit, which is great and it’s great to have businesses that have that leverage, and so it’s somewhere between $7 million to $10 million, I would say, would be the impact of seasonality that I would guide you too.

Okay. So the quarter would be $7 million to $10 million higher than what we might expect in Q2 from --.

That’s exactly right. You will see a drop-off in Q2 due to natural seasonality, and yeah, so that would be a good estimate.

Okay. Thank you. I will get back in the queue.

Thanks, Rupert.

Thank you. And our next question comes from Robert Kwan with RBC Capital Markets. Your line is now open.

Good morning. Just with Euroports sale and you have got some pretty positive comments around PDP. I am just wondering, now that you have exited the rest of Europe, what is the longer term plan for PDP and even just how are you thinking about your global ports business in general?

Hi, Robert. We -- today, we operate even after the sale of Euroports in the U.K., North America and Australia, and other businesses are performing fairly well. And I think our plan would be that even to extent that we sell off mature businesses, we would look for opportunities to re-enter the sector on a value basis. In the case of PD we are particularly excited about some of the recent developments that’s going on in the ports. I am sure you noticed the announcements this past week with Serious and the fundraising activities they have underway. They have made significant strides in raising up to $3.8 billion to complete the financing package that they need to build that mine, that will have a huge impact on PD ports, driving potentially 10 million tons through the port. There is also some other poly halite operations in the area that is also increasing production. So we are quite encouraged by that and then hopefully next year we will have the commencement of the biomass power facility at PD as well, which should drive significant volumes through the terminal. So that’s just a fantastic new story. But it actually as it relates to our ports business, it doesn’t stop there. Our volumes and contract wins in Australia have been quite strong as well and it’s been a very good year and our business there is probably doing better than we expected.

Got it. Turning to data between you are highlighting wireless fiber and then the integrated just few different things. Where you are seeing the best opportunities within those three and then you talked about customer facing activities. Can you just talk about your thoughts on B2B versus B2C in that business? And then the third on the integrated side, would that be something where you would own the telecom/data equipment, and how do you just think about the technological risk?

Okay. So I will start and then Bahir or Ben can chime in if they have other thoughts. But I would say, today we are looking at opportunities across all four of those segments that I described and across the world. So I would not say that there is any one particular component of the data sector that doesn’t require capital and that there are people looking or parties like ourselves to help them. What we are doing is, obviously, trying to put our capital to where we can get the best risk adjusted returns and that varies moment to moments. But I’d say, we feel confident that we can likely invest in each of our regions in the data sectors space in a not too distant future. So we -- I’d say it’s -- I can’t point to one particular component. It’s actually pretty active on all the components. As it relates to B2B versus B2C. Yeah, we are value investors. So I think we are somewhat agnostic so long as we can get the best risk adjusted returns and so each business is compared based off the regulatory framework, the market conditions, the contractual framework and how those all come up in terms of returns. And we see opportunities in both businesses today and we are pursuing opportunities in both B2B and B2C. As it relates to B2C in the data sector, I guess, this is mostly in those integrated type businesses. What we have found is that in certain small markets attempting to disintermediate the retail component from the infrastructure assets sometimes is counterproductive, because you are actually creating more risk for the business as opposed to less risk, because that there is you are creating a person in between you and the ultimate user of the asset. In large markets where you have big players who can stand behind their contractual frameworks with the balance sheet then that’s fine. But otherwise, as long as you are not really paying much for that retail component then you are actually better to keep it, even though it might on the surface seem to give you more merchant exposure. And so I think people just need to appreciate that you have to do a deeper dive into understanding the dynamics before concluding that just more risk to a B2C business and a B2B business. So those are the type of considerations we make when looking at this. We effectively though are looking at opportunities where we can provide utility like services to consumers through broadband and wireless, and how we get there, there is multiple ways to do that.

Got it. And then just on owning telecom data equipment technological obsolescence?

Yeah. I think the, again, where we are looking to invest is where the surface is primarily driven by the large networks being and a large investment being in the fiber and the tower networks and not so much on businesses that are very sensitive to switching and whatnot. But, yeah, there may be some component to that, the more you get into owning some of these surface components. But again that all goes into the underwriting analysis.

Okay. Thanks very much.

Thank you.

Thank you. And our next question comes from Robert Catellier with CIBC Capital Markets. Your line is now open.

Hey. Good morning, everybody. I’d like to start with hedging. I noticed a percent of FFO had just 70%. I wondered if you could give us an update on your thoughts about eventually getting around to the Brazilian reals are hedged?

Hi. Good morning, Robert. It’s Bahir. So, yeah, as you correctly noted, 70% of our FFO today is either generated in U.S. dollars or has been hedged back to the U.S. dollar at least for the next 24 months. In recent quarters, we added hedges as well to the various LatAm currencies that we are exposed to and so the remaining position is predominantly relating to the real. We have noted in the past as you recall that we do have plans to hedge that currency just as interest rate differentials between the two countries being the Brazil and the U.S. have come down. But we are looking still for a rebound in the currency before we commence those activities. At today’s levels, we wouldn’t be interested in hedging the currency. Our view would be that it will rebound from here as we noted in our commentary last quarter. So, look for, if we are correct on that call then we would look to put on hedges against our real FFOs later on as the currency rebounds, but not at these loans.

Yeah. I guess the fact that your 70% hedge gives you the luxury of time. But I am sort of wondering if whether or not the fact of the hedge level is so high currently whether there is an impetus to hedge the real at all, price notwithstanding of course.

Yeah. And what we are not trying to do here is necessarily take our business 200% being cash flows hedged or generated 100% in U.S. dollars. So it may be a component depending on the analysis we do and the costs involved at that time. But we would love to get it Robert up to 80 to 85, I think that’s what we you know, the guidance that we gave at our last Investor Day and but that all depends on if it makes sense at that point or not. So the analysis is still, it’s fluid, it’s dynamic, but that’s our thoughts as of today, but no assurances whether or not we will get this done or not.

Okay. One more accounting question before I go to the operations. I think you gave the FFO impact from IFRS 16 in the quarter. Did you have a full year impact or you are expecting under the current makeup of the business?

No. We think it was $7 million for the quarter so it’s insignificant in the grand scheme of things that predominantly relates to FFO coming out of our Ports business, sorry, our Transport business and you should expect those levels for the next couple of quarters as well, so it will be consistent.

Okay. Just on the operation side, the 24% growth in container volumes across the portfolio, I mean, what was driving that, I mean, it can all be organic growth.

So, we had a bunch of -- so first we had some contract wins as Sam alluded to at our U.K. operations, so those contributed quite significantly in the quarter. There were organic just natural tariff increases and such that we also enjoy. And then in our North American business, we had the higher moves activities there too. So that in total sort of equated to 24%, some of the businesses were higher, some of the businesses were lower.

Okay. Just moving on finally to Enercare, you mentioned that a exclusive provider for the home technology, smart home technology to those homes in Texas, what other business development progress have you made within Enercare and what do you think the organic growth for that segment will accelerate?

Yeah. Robert, it’s a good question. So, on Enercare, we have a number of initiatives, especially in the United States to in the focus on the growth profile of the business that drive growth. We are working on a number of projects to leverage the Brookfield relationships we have across homebuilding. I think as Bahir mentioned in his comments across various utility businesses we have and we are also looking at expanding our partnerships with plumbing services, home and condos servicing type businesses. So in addition to I’d say just improving the basic product offering from Enercare, we are looking to leverage a lot of additional levers to get into different sales channels to drive the rental model, especially in the U.S. And in Canada, a couple of developments we have had -- we have now entered the Alberta market, so there are some additional markets that we are trying to enter into once again leveraging across Brookfield.

Great. Thank you.

Thank you. Our next question comes from Cherilyn Radbourne with TD Securities. Your line is now open.

Thanks very much and good morning. In terms of your M&A pipeline, clearly you have highlighted that Data Infrastructure is a focus this morning, wonder if you could just update us on what you are seeing in other areas that have been topical for you particularly energy infrastructure and then India more generally?

Hi, Cherilyn. It’s Sam. Well, maybe I will touch on India first. I just got back from India last week and so it’s relatively topical. Just on the market itself, I have to admit, I came away quite encouraged with the macro situation there even though there is still a significant amount of stress in the credit markets there, as a result of the non-bank financials and some over leverage that took place in that part of the economy. But otherwise, inflation is very much under control. GDP growth looks like it will be probably the highest among the large economies in the world over 7%. And it appears that Modi will be reelected and so at least with his allies, hopefully, I am not proven wrong in that, but that appears to be the general wisdom and people see that as favorable from a business perspective at least giving us a stability there and so that gives us encouragement to continue to focus on the market. Today, we see a number of opportunities in that market in the Port sector, in the Toll Road sector, as well as in the Data Infrastructure sector. We will continue to have conversations with Reliance Industries on various initiatives that they have underway. As you know, we did a transaction on the pipeline with them and they become a key relationship for us in that market. And I think the outlook for opportunities there is quite strong. So I’d say all in all, I think our team is doing a great job there, and there should be lots of opportunities to grow in that market going forward. As it relates to other areas, clearly Data Infrastructure is one of our key focuses. Energy continues to be adventures, I’d say, with the recent the stock market recovery and just the general enthusiasm credit, enthusiasm here in North America, it’s probably made it a bit more challenging in the North American energy space to do transactions, but there is still lots of opportunities and while there may be a near-term delay in some of those, I think, we will have lots to do going forward. We have a number of opportunities in the Utilities and Transportation sectors that are currently underway, and hopefully, we will be able to progress those into acquisitions over the coming quarters. So, all in all, I’d say the environment is good and the pipeline is quite strong.

Okay. Well, that’s very helpful color. Maybe just a quick one for Bahir, you pointed there is some pretty strong growth in the second half excluding foreign exchange. I think you have indicated previously that your hedge rates are somewhat higher in the back half of the year, year-over-year. So should I read into that that the real is kind of the key wild card there?

Hi, Cherilyn. Yeah. That’s exactly right. We do expect to see a pickup from this quarter’s results into the last quarter of the year, just because our hedged rates that will be about 5% to 7% higher than what they are for this quarter and then the real will be the wild card as you noted so absolutely.

Great. Thank you. That’s all from me.

Thanks Cherilyn.

Thank you. And our next question comes from Devin Dodge with BMO Capital Markets. Your line is now open.

Hey. Good morning, everyone.

Good morning, Devin.

Good morning, Devin.

So NGPL continues to perform really well. Just can you give us an update on the opportunities that you see for this pipeline over the next one year to three years and can you give us a sense for the utilization of the asset and whether you have been on board these additional volume opportunities at relatively low incremental cost?

Yeah. Hi, Devin. It’s Ben. Yeah. We are still seeing some good growth opportunities at NGPL predominantly driven by just the need to get more gas flowing down to the LNG infrastructure on the Gulf of Mexico. And most of the projects that we are seeing, we just completed one and we have a few other projects that are in undergoing FERC filing and commercialization and they are all very capital efficient. So they are all -- we don’t need to build a lot of new pipe infrastructure, it’s mostly compression type infrastructure to increase flows to those facilities. So they are very -- I would describe them as very capital efficient and it feels like that markets team, we have been seeing still has a few more innings to play out, so NGPL is still positioned very well.

Okay. That’s helpful. And then maybe a broader question, one of your larger competitors recently switched from a partnership to a C Corp structure. Just can you talk about whether it changes ever being considered at Brookfield and maybe the merits of that remaining as a Bermuda based partnership?

Devin, maybe I will tackle that one. It’s Sam. The -- I would say we have noted all the recent announcements and while the background and circumstances are different from those companies to our Bermuda based partnerships. They are good food for thoughts. And I think at the overall band level we are evaluating the merits of the structure, which we always do and seeing if there is anything we can do to improve it. Today, there is no plans to make any change, but I think as more knowledge and understanding comes out from what others have done we will definitely learn from them and take stock. So that as much I can tell you right now.

Okay. Thank you. That’s it from me.

Okay.

Thank you. [Operator Instructions] Our next question comes from Andrew Kuske with Credit Suisse. Your line is now open.

Good morning, guys. The first question is probably for Bahir and it’s just on the Australian billion dollar of debt financing that you did. Could you just give us some color around that the tenure, the rate and then where it actually resides?

Good morning, Andrew. Say the tenure was -- it was a five-year facility that we got done with a number of institutions in the local market there. As far as the cost, it was I believe is about 5%, and sorry, there was a third component of your…

[Inaudible]

What is it, oh, sorry, it resides in the Patrick’s Terminal business, so this would have been the business that we acquired from Asciano back in 2016.

Okay. And then maybe just another question sticking with Australia, as it relates to DBCT, is there anything on the regulatory front that could be of interest and asking part just because we saw a rise and you signed a 10-year commercial agreement with some of its customers and it had an upward bias and effectively the WACC that that they are receiving. So, I am just curious, is there anything of note as it relates to DBCT specifically?

Yeah. We are -- Andrew, we are waiting on a ruling that hopefully will come out this calendar year, if not early next calendar year on DBCT’s regulation. And but at this point it’s sort of premature to guess what it will look like, but we -- the base business today, we are not expecting it to change at all there, the regulation if anything could improve the facility, but at this point sort of too early -- there really haven’t been any material development.

Okay. That’s great. Thank you.

Thanks, Andrew.

Thank you. And our next question comes from Dennis Coleman with Bank of America Merrill Lynch. Your line is now open.

Thank you and thank you for taking my question. I guess, there has been quite a lot of discussion about the opportunity in telecom and related areas and maybe just to ask a very specific question just because of quite a lot of chatter out there. I wonder KPN has come up a lot in relation to Brookfield Infrastructure. So just, I guess, the question is more broadly, can you address that in any way just to give you an opportunity to talk specifically about that if there is anything you can say.

So, Dennis, I guess, our standard answer for transactions is, we can’t really speculate or talk about transaction, so whether or not there is something going on or not, it probably would be inappropriate for me to comment. So all I can say is look -- that’s a large situation, obviously, but we, yeah, we are looking at various types of transactions around the world that could assist companies in servicing value for themselves and that could include part of the assets or companies themselves, but I can’t comment on that anymore than that.

Sure. No. I appreciate that and just wanted to give you the chance to say that and we can move on. I guess my second question, you had the contract roll off in Brazil. If you can just remind me, are there any other potential roll-offs or if any progress on capturing new opportunities?

Hi, Dennis. It’s Bahir and maybe I will take this one. So you are absolutely right we did have that happen. Last year we do have another one of our state road concessions that expires on June 30th of this year and then another road -- another state road which would be the final one, that would be -- that has its concession agreements expire on November 30, 2020. In terms of an FFO impact, it would be about $4 million to $5 million a quarter for each one of those roads. But that would be offset by various expansion programs that we are carrying out in that business that are -- that have come on line or are coming online in addition to a couple of tuck-in acquisitions of roads that we have made in the prior year that are also contributing to our results. So I would expect the FFO -- the impact to our FFO to be neutral, but just for people to note that there are those two concession handbacks that will happen between this year and next year.

Okay. Thank you for that. That’s it for me.

Thanks, Dennis.

Thank you. And our next question comes from Jeremy Rosenfield with Industrial Alliance. Your line is now open.

Thanks. Good morning. Just from a high level strategic perspective and I appreciate a lot of color on the data infrastructure. In terms of the sizes of opportunities that you are looking for in the past that they have been sort of what I would call sort of bite-sized opportunities. Do you think that there is an opportunity to be more strategic and to go after larger targets looking forward within the data infrastructure business to really establish a much larger platform going forward?

Hi, Jeremy. I guess, it’s Samuel. I will tackle that one. I think the short answer is, yes. I think, we are seeing opportunities across the spectrum in terms of scale. One of our key advantage as an organization is the fact that we do have a structure where we have committed capital that we can invest alongside Brookfield Infrastructure and it’s a significant scale. And in addition to that, those investors who have committed capital alongside of us have an interest to invest with us on various transactions like you have seen on transactions like NTS or Asciano, our ability to pull together capital for $5 billion to $10 billion transactions is not unheard of and so we can do large transactions. But it will be in partnership with others and obviously we will manage BIP’s capital according to its capabilities.

Okay. Good. And then just a little bit of a cleanup, and I may have missed this off the top, but there was a mention of a buyout option on Brazil Transmission Infrastructure and I was just wondering if you had a number in terms of the expected investment to execute those buyout options.

Good morning, Jeremy. It’s Bahir. I will take that one. The number is going to be small. So it’s going to happen in various parts of the year that would be our expectation. On a net [to BIP] basis, you are talking about $25 million to $30 million here. While the number is small it’s strategically very important as we are going to be now 100% controlling those assets. But, yeah, that would be the expectation as of today.

Okay. Perfect. That’s what I was looking for. Thank you. That’s it from me.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session for today’s call. I would now like to turn the call back over to Sam Pollock for any further remarks.

Okay. Well, thank you, Daniel, and I’d like to thank everyone for joining the call this morning. We look forward to updating you on our progress during the upcoming year. Thank you.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude today’s program and you may all disconnect. Everyone have a wonderful day.