Good day, ladies and gentlemen, and welcome to the Brookfield Infrastructure's Second Quarter 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 conference call may be recorded.I would now like to introduce your host for today's conference, Mr. Bahir Manios, Chief Financial Officer. Sir, you may begin.

Thank you, Operator, and good morning everyone. Thank you all for joining us -- for joining Brookfield Infrastructure Partners' Second Quarter Earnings Conference Call for 2019. Joining me on the call today is Sam Pollock, our Chief Executive Officer; and Ben Vaughan, our Chief Operating Officer. Following our remarks, we look forward to taking your questions and comments.At this time, I'd like to remind you that in responding to question 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.Moving on to our operating report this morning, I'm pleased to discuss our results of operations for the second quarter, and provide you a quick update on our liquidity position. We reported another strong quarter with funds from operations, or FFO, $337 million or $0.85 per unit for the three months ended June 30, 2019. This represents increases of 15% and 13% respectively over the same quarter of the prior year. The second quarter results are the first to reflect the full benefit of the most recent phase of our asset rotation strategy. To summarize the strategy, last year, we generated combined proceeds of $1.5 billion from selling an interest in a mature de-risked electricity transmission business in Chile, and completing a financing at our Brazilian regulated gas transmission business.These monetizations occurred at values that represented a 7% average FFO yield, and the proceeds were subsequently redeployed into seven higher growth businesses across our Utilities, Energy, and Data Infrastructure segments that generate on average a going-in FFO yield of 12%. The value…

Thank you, Bahir and good morning everyone. From my remarks today, I'll discuss some of our recent strategic investment initiatives and then I'll conclude the call with an outlook for the business. Let me begin by saying that we've been very pleasantly surprised at our ability this year to convert a number of the opportunities in our pipeline into secured investments.This week, we closed on a $200 million investment in a New Zealand data distribution business and we expect to invest a further $1.2 billion net to BIP in other initiatives by the end of the year. These investments will meaningfully expand our presence in the North America and Asia-Pacific markets, starting with the New Zealand transaction; we along with the strategic partner acquired an integrated telecommunications provider in New Zealand for $2.3 billion. This is a market leading business that provides utility like broadband and wireless services to 2.5 million customers. With this acquisition, we own and operate a country-wide wireless and fiber infrastructure network including 1600 cell sites and 10,000 kilometers of fiber optic cable providing wireless coverage to over 98% of the population. Brookfield Infrastructure and its institutional partners contributed $700 million of equity for our 50% stake in this business with BIP share being approximately $200 million.Next, we recently announced the $8.4 billion take private acquisition of Genesee & Wyoming or what I refer to as G&W. This is a high quality rail business based primarily in United States but it also has operations in Canada, the U.K. and Australia. We'll be acquiring the business alongside institutional partners with BIP share of this equity being approximately $500 million. While the original transaction included G&W's 51% interest in the Australian business, we recently agreed to sell this stake to a consortium led by the existing 49% owner.G&W…

Thank you. [Operator Instructions] And our first question comes from Cherilyn Radbourne with TD Securities. Your line is now open.

Thanks very much, and good morning.

Good morning.

First question is just on India generally. Obviously, you have been quite active in that geography. I wonder if you could just give us a sense of how big that becomes pro forma as a percentage of the portfolio, and just talk about how you plan to manage the foreign exchange exposure.

Hi, Cherilyn, maybe I will tackle the first part of that, and I will leave it to Bahir to talk about managing FX. Yes, I think we have mentioned on previous calls that we expect to grow our Asia-Pacific business just given the relevance of that region to global GDP, and just the growth rates in that part of the world. Today, our biggest focus I would say is in India, although we have investment professionals in Japan as well as South Korea, China, and obviously we include Australia, New Zealand in that group as well.I think in the near-term, our focus will be on India and Australia/New Zealand; those are places where we have a long history of activity group wide. And in India, I think our growth in that market will be modest after this particular transaction. I think there maybe you know, select opportunity to do a few other things, but I believe, where we see the best opportunities are in the energy and telecom sectors, where we can transact on a B2B basis, and we'll leverage the big platforms that we have. So we're excited by the two recent investments that we've made. I think that will be our focus, and in growing those platforms, and I don't necessarily see another transaction, although I guess the only other sector I'd say that we do monitor and we think is a very attractive sector is the airport sector in India. And so, something came along there, I think that's something we look at as well.

And Cherilyn, it's Bahir, just to add a couple of remarks. So, pro forma this deal, just to provide you some context, here, we will have about $600 million of equity invested in India through this tower business pipeline we recently acquired in addition to our total business. And if you -- and from an FFO perspective, they will contribute somewhere in the range of about, call it, 4% to 5%. So it's modest, as Sam mentioned, but that's just to give you some context. And with respect to foreign exchange, we are studying that as we speak, and I would say my conclusions as of today would be not dissimilar to Brazil is that it might make sense to at least hedge our FFO for the foreseeable future, being 12 to 24 months there, but we'll have some more clarity on that as we progress our -- the closing of this transaction in the coming months.

Great. All of those comments were very helpful. And then second question, last quarter, you have outlined a potential interest in acquiring asset-heavy telecom operators, and outlined some pretty specific criteria that would need to be met. Can you just comment on the extent to which the New Zealand acquisition that you made was kind of a unique one-off opportunity that met those criteria? In other words, was that unique, or do you think that there will be other opportunities to do similar deals?

Hi, Cherilyn. I'd say, today, it's the only opportunity that has met that criteria, but I wouldn't want to say that it would be the only ever. I think there are other markets, where there hasn't had an unbundling of the network assets, from the operating business, and the competitive dynamics are in a structure that we'd be very comfortable with. So, New Zealand definitely did tick all of the boxes that we were looking for, but I think there could be other situations where -- yes, something could fit our criteria, but today we haven't found one, and we'll keep you posted if something arises.

Thank you. That's my two.

Thanks, Cherilyn.

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

So you've had a pretty big ramp up in acquisition opportunities and looks like your messaging you do have a lot in front of you on that front. So I'm just wondering as you kind of see a lot of those opportunities, does that cause you to look at kind of high grading return hurdles or at least from the depth perspective, do you manage down BIP's investment size or accelerate capital recycling?

Hi, Robert. I would say that at the moment we are definitely high grading our investments to generate or invest in the highest return opportunities. I'd like to think that we are always disciplined. So I wouldn't want you to ever accuse us of investing below our return targets. I'm not sure that it's what you are implying, but whenever we do have a lot of activities underway, activity levels underway, and we know that we have a scarce amount of capital that we can deploy, we definitely become choosier and push up our return target. Sorry, go ahead.

No, I was just saying, yes, like that's kind of what I was looking like you've got depths in the private capital side of kind of the Brookfield umbrella, and I'm just wondering how you think about it BIP's perspective, or you focus so much on financing without trying to change the unit count. Ultimately what do you think the depth of the public markets are and how do you manage that interplay?

Yes, look we -- as we've mentioned on other calls, we have to live within our means. We only have so much capital, and obviously we have a lot more institutional capital that we can deploy. And I think the benefit that we have in BIP to the extent that we have extra capital that we can deploy and we have opportunity to participate in co-investments then we will use that extra capital and invest in co-investments in those deals like NCS and others where we see exceptional returns. And if we don't have the capital, then we just we'll invest the amount that goes into the fund.

Okay that makes sense. And then maybe just to finish on energy and NGPL specifically, and you've had a number of growth projects that have really helped to grow that business. I'm just wondering, looking forward, many of the peers with North to South trunk lines have announced expansions and extensions fairly recently. What are you seeing right now in terms of additional growth off of NGPL and what type of magnitude of capital do you think we could see there?

Hi, Robert. It's Ben speaking, I'd say NGPL, we haven't seen any change in the growth trajectory. We're still seeing clients eager to move gas on our network and access the LNG facilities down in the South. So we have a project underway today that will be finished in the next couple of years and we have another column few projects that we are working with clients to try to get off the ground. So at this point, I would say, we haven't seen any come off of the growth trajectory of NGPL.

That's great, thanks very much.

And our next question comes from Rupert Merer with National Bank Financial. Your line is now open.

Good morning, everyone.

Good morning.

Bahir, you mentioned the last phase of asset rotation is delivering going in FFO yield of 12%. So looking at the portfolio of investment opportunities you have in front of you now $1.3 billion, you're talking about opportunities maybe for high grading returns now, how does this group of opportunities compared to the last phase of asset rotation, if we have this conversation this time next year, what do you think you'll be able to say about the going in FFO yield and and what are these assets do for the outlook on growth in cash flows for 2020?

Hi, Rupert, thanks for your question. So as we look forward to the next phase of the capital or the capital recycling plan, which let's call it another $1.5 billion that we expect to deliver on by the end of next year. We've already sort of done about $700 million of that or so with the recent acquisitions that we've done that all have going in FFO yields that are not only comparable to what we talked about for the first phase, but also for going forward. So I would say it's not only consistent, but could be higher, but we not outside the realm of possibilities that we acquire other businesses that might have also a ramp-up. So we'll look at it on an average basis.Now, we typically average anywhere between 10% to 12% going in on most businesses that we acquire in some situations there in the single-digits and ramp up, but that's sort of, I can't give you any more guidance than that unfortunately, but with the strong going in FFO yields from Mexican pipeline and from the Indian telecom business in addition to our business plans of how we see very strong growth in our FFO per unit heading into 2020 at this stage.

Okay, great, thanks for the color. And then secondly, in the last quarter, we've seen lower rates in North America, South America and Europe. You give us a sense of what your opportunities could be for refinancing or for hedging your currencies in Brazil. Just an update on where you stand today please?

Sure, I can take that one as well, Rupert. In the next couple of years our maturity the good news is our maturity schedule is pretty light. So I guess you may not see a huge pickup in our immediate FFO from refinancing activities. But on the flip side, it's great that for at least the next five years, we don't have any material maturities that we need to address in our business as a whole.With respect to your question on hedging for all the OECD currencies we're well hedged into 2021 and our thoughts on Brazil hasn't changed over the last couple of quarters since we addressed this topic last meaning we think still, it probably would make sense for us to hedge our FFO, at least for 12 to 24 months, but we do need to see a bit of a pickup in the currency, the good news is this quarter it's rallied a bit, its in around the 370 to 380 range, but we'd like to see a bit more movement on that front before we decide to lock in any contracts there. So I guess let's route for that maybe by the end of the year as pension reforms, happened in the country and hopefully we can give you some more color on this in the future.

Great, thanks very much.

And our next question comes from Frederic Bastien with Raymond James. Your line is now open.

Hi guys. It was great to get some color on all the organic growth initiatives that you have underway across your operating platforms. Just wondering if you could provide an update on how the U.K. distribution business is going?

Sorry, Frederic, it's Ben again. The U.K. distribution business continues to perform extremely well. It is exceeding our plans on connections. For the year and the sales every year we've hit sales records and we're on track to achieve that again this year. So we've seen, in addition to that, we're still seeing clients taking more and more of our product offering. So we're able to sell multiple products into development. So far there's been no deceleration of activity in our distribution business in the U.K., it's been performing very well.

And Frederic, it's Bahir. I'll just add one small comment to Ben's. Just recall also that we've got a pretty big backlog in that business. So, notwithstanding the strong sales activities that Ben just noted, we've got about three to four years worth of growth that will come into our results with the continued build-out and investment of that of that backlog. So we would just still expect to be generating anywhere between 7% to 9% AFFO growth in that business just from our backlog alone for the foreseeable future.

Okay. And is the potential for a how Brexit change that view?

Look I guess you're at this point, your guess is as good as ours. But we think this is the U.K. is a fantastic country, there could be a slight dislocation in the near-term. We just don't expect that at least housing levels are going to change materially, given that most of this activity happens within and it spread out well across the country and the country is does actually have a huge shortfall when it comes to housing. So we might see some dislocation from a sales activity perspective, but we continue to think that at least our order book would get built out.And Frederic, may be just to speak more high-level, look, we obviously, across Brookfield have significant investment in the country. And as you know, Bruce lives there now, and I think our general view is that, we expect that the right things will get done and there won't be a calamitous fallout, but even if there is, the capacity for the country to weather, the storm and muddle through and succeed in long-term, it's proven to do that century-after-century. So we're confident that whether or not they -- there's a delay and how they restructure their trade arrangements with Europe, it will ultimately get it done and that business will continue as it has for many decades and centuries. So I don't think we should get too past about what happens over there. And I think, all-in-all, well it may not be the optimum outcome that we all would prefer, I think it'll be fine.

Great. Thanks, guys. That's all I have.

Thanks.

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

Thanks. Good morning, guys.

Good morning.

Good morning.

So on the sale of the Australian portion of G&W, do you expect the proceeds to reduce your capital commitment? Or will these funds be retained in the business to do tuck-in deals and maybe any kind of commentary on how that rollout pipeline looks right now?

So just on the sources and uses of the transaction, we sculpted the equity check to match the transaction, assuming it was going to get sold, we have effectively knew at the time of signing that we would have it sold. So this was all prepaid. And so, the $500 million that we intend to invest, you know, will be largely that. And I think your second question was just on initiatives within the business. Am I correct? Is that right?

Oh, just how the M&A pipeline looks for G&W?

Yes, so the pipeline actually is reasonably good, we didn't buy the business on the assumption that it would be able to achieve the level of tuck-ins that it has done in the past. I think that's somewhat upside to our underwriting case. But there are a number of transactions in the market. Yes, I think in the next couple of months, the activity level for them may be less just as they work with us to get through the regulatory approvals. But post-closing, we expect to ramp up the business development efforts again and continue to execute what they've done in the past as far as integrating a number of tuck-in acquisitions and projects with Class I. So the that part of the business plan will be unchanged.

Okay. That makes sense. It's helpful. Maybe just stick with G&W, but many of the larger North American railroads are adopting this some form of precision scheduled railroading. I don't think this is an option for shoreline railroad. But as you interchange with the Class I rails for most of your freight, do you think they're moved towards PSR will have an impact on your operation, either in a positive or negative way?

No, I think it's all positive. And I think this notion that you can't achieve the cost savings with short ones that you do on the class ones, I think, is a bit of a myth. I think, the more that we look at it and have done our analysis. We think that there are, different forms of precision railroading that you can do with the class too that can takeout costs. And I think the -- as relates to the Class I, we've already had lots of inbound from Class 1 looking for opportunities to develop strategies for all of us to create value. And we're not quite sure yet what that will entail or if it's achievable but there's no doubt there is a desire to collaborate further between the Class 1s and Class 2s to achieve cost reductions and drive business. So that's something that hopefully we can add to the business. I don't want to imply that G&W didn't already have great relationships with the Class 1s, we know they do. But maybe our involvement can bring some other strategies to bear that would further that.

Okay, that's helpful. And maybe one last one the commentary on Enercare seemed quite positive. It seems like BIP is looking more of a role up strategy in the U.S. Can you give us a sense for which region look attractive maybe the multiples you pay for these kind of tuck-in deals and the benefits that scale brings to this business?

Yes, so Devin it's Ben again. Either the U.S. has a highly fragmented market on the HVAC fronts, so we're pretty excited by the opportunity for smaller tuck-ins and roll-up strategy, we're mostly focused in the U.S. some markets like you saw the deal that we did here in Phoenix. So I'd say that's generally the area that we're targeting. And the multiples it sort of depends on the business but our strategy is to convert what would have been either sales of units or just pure servicing organizations into long-term rental contracts. So we're looking at a pretty significant ARB, if you will, of what you can buy some of these businesses for and what we will ultimately convert them into over a longer term strategy of building out our U.S. business.And then just in addition to that tuck under acquisition strategies, we've seen so far in Enercare a higher conversion of our sales of HVAC as Bahir mentioned to long-term rental contracts which has been great. We've targeted somewhere a little less than 10% of our sales converting and we're well up over 35% which has been very attractive and in addition to that, we've had success so far at bringing some additional strategies from the broader Brookfield to bear. So we've actually launched our pilot project with the utility in Texas that Bahir mentioned to basically get them to help us be an additional sales channel for the business. So far I'd say tuck are one part of the story but the overall growth strategy at Enercare in the U.S., I'd say we're pretty excited about. And on a few fronts, so far it is exceeding our expectations, which has been great.

Yes, it's great to hear. Thanks guys.

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

Thank you. Good morning. Maybe just earlier in the week we saw the Vodafone announcement of the creation of the TowerCo and fairly positive stock reaction that followed. So does that dichotomy of valuation between the OpCo in a mobile sense and then the InfoCo [ph] is that the core of your telecom thesis?

Hi Andrew. Are you referring to the Vodafone announcement?

Yes, exactly.

Yes. Okay, sorry. Well, look, I think part of it is a financial arbitrage, there's no doubt that there is an ability to surface value for a lot of Telcos just from exposing the different parts of their business and breaking them out from their operating businesses. And we've seen that done across many industries. But I think it goes much deeper than that. I think what we've witnessed in many industries but we believe it exists in the telecom sector is that because they get so large even though you would think that there's obvious synergies to be able to bundle services whether it's services or obviously other video and other content often what happens is, as they look to deploy capital and they have limited amounts of capital to deploy, they put it towards what they think are the most important things and they are undercapitalized and under attend various parts of their business.And so we think, much like we saw when many industrial companies used to own all their real estates, that they just weren't as good at managing those types of assets and that professional owners of those types of businesses could extract more value. And so I think there is a financial arbitrage, but I also think that groups like ourselves can commercialize towers fiber optic systems and storage - data center businesses storage businesses by creating more third-party revenues and just ranging them at lower cost than what some of these large businesses can do because they're not paying as much attention. So I think when you think of the whole thesis, you need to think of it as far more than just a financial exercise.

That's helpful. And I guess, just an extension of some of those comments. Most of these transactions you have higher going in multiples on some of their communications infrastructure, but also much higher rates of growth. Then you a lot of, let's call it traditional infrastructure. What's the sweet spot for you in these kinds of transactions? What kind of rates of growth do you really underwrite?

Andy, are you referring to any type of data Infrastructure business particular, because they're all somewhat different?

Yes. You talk about data centers or towers where if you got multi tenants on a mass, obviously it's quite high, if you're starting with one tenant and you scale it from there. But any color would be appreciated.

Yes. So look, I think -- If you look at the data center businesses. Yes, I think with let's called mature businesses that are in the retail colocation part of the market, which is not as much development oriented, then low to mid teen type multiples would make sense, given the growth rates and the cash conversion that you have in the business, you can achieve and we have paid multiples in the high teens, low '20s for businesses that are in the - that serve the Hyperscale market because you have much more of a development business attached to it, and the value generate through your development pipeline is extremely high, and usually what happens is after building out the existing portfolio that usually takes two or three years, you buy down your multiple to those low teens. And then you just have a highly contracted portfolio and obviously when we're looking to do these types of investments, we're trying to get as much of that development engine for free. And so, we're looking to buy down that multiple very quickly and in the case of Ascendi [ph] and in the case of BCI, the two Hyperscale businesses we bought last year that's what we fully expect to do.In the towers business, it all depends on the type of market share in and how much you expect the colocation opportunity to be. In the Indian market, we've actually assumed a relatively modest level of co-location just given the consolidation that's going on, but that could be where we could over exceed our underwriting and hopefully do a lot better. But given the - again the historic high cash conversion from the towers business and the fact that, just the number of equipment that you've been able to add to the towers over time and additional fees you can generate from that, that's justified frankly the high, double-digit, low 20 times multiple those businesses. We have not paid those historically, but we definitely see that in the market.

That's helpful. One final one, really simple one, just on the Mexican pipe, and I might have missed it, in the disclosures, but is that with from ACA as your partner?

Sorry?

The Mexican natural gas pipe is your partner for ACA?

No.

Okay. Thank you.

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Sam Pollock for any closing remarks.

Okay. Thank you, Operator, and thank you to everyone who joined our call, and thank you for all the analysts for the questions. And we hope everyone has a great rest of the summer, and we look forward to speaking to you again next quarter, and updating you on our progress. Goodbye.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.