Ladies and gentlemen, thank you for standing by and welcome to the Brookfield Infrastructure Partners Q3 2021 results conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. . It is now my pleasure to introduce Chief Financial Officer, David Krant.

Thank you operator and good morning everyone. Thank you all for joining us for Brookfield Infrastructure Partners third quarter earnings conference call for 2021. My name is David Krant and I am the Chief Financial Officer of Brookfield Infrastructure Partners. Joining me today's call is Sam Pollock, our Chief Executive Officer as well as Ben Vaughan, our Chief Operating Officer and Brian Baker, our Managing Partner, will be available for questions following our remarks. At this time, I would like to remind you that in responding to questions, as always 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, let's move on to third quarter results. We are pleased to report that Brookfield Infrastructure reported another strong quarter. Funds from operations or FFO totaled $422 million, an increase of 16% compared with the third quarter of 2020. On a per unit basis, results were 13% ahead of the prior year, even after considering the impact of the BIPC shares issued in connection with the privatization of Inter Pipeline or IPL. Strong organic growth continued in the third quarter as results benefited from global economic expansion, improving commodity prices and the impact of inflation on our revenue stream. This was also supported by strong growth from our base business and the initial contribution from IPL. Excluding the recovery of shutdown-related effects experienced last year, our organic growth was robust at 9%. This includes inflationary tariff increases and the commissioning of over $800 million of new capital programs in the lat 12 months.…

Thank you David and good morning everyone. For today's call, I will make some comments regarding today's operating environment, discuss some of the strategic initiatives we have underway and I will conclude the call with our outlook as we head into 2022. Let me give begin with a brief comment on today's operating environment. It is our belief that the combination of favorable capital market, healthy economic activity and low interest rate is driving three important macroeconomic themes that are all very positive for our business. The first theme is elevated inflation. Whether through regulated frameworks or contractual entitlements, approximately 70% of our revenues are indexed to local inflation. This feature combined with strong free cash flow conversion levels is driving significant FFO growth within our base business. Next is rising commodity prices. Now although 80% of our midstream sector revenues are insulated for commodity prices, the remaining 20% are market sensitive revenues that should outperform in the current environment. Additionally, higher commodity prices result in more free cash flow generation for our counterparties which not only strengthen their financial positions but it can also lead to higher volumes and customer initiated growth projects. The last theme I wanted to mention is supply chain bottlenecks. Logistics infrastructure worldwide is under stress given the recent disruption to traditional supply chains. This puts a spotlight on the essential nature of our networks and facilities. When demand for infrastructures is high, we tend to realize higher tariffs as customers compete for whatever remaining capacity is available. We also tend to generate more revenues from storage services. As a result of all of this, in the near term as these complementary market forces continue, our business is well-positioned to benefit from higher volumes, increased tariffs and new capital expansion projects. Now let's review some…

. Your first question comes from the line of Cherilyn Radbourne with TD Securities.

Thanks very much and good morning. Maybe just to start on the AusNet deal. So if you could elaborate a bit more on the unique characteristics of that deal which made it possible for both super core fund as well as BIP? And whether you think that's a unique circumstance or something that we could see more of going forward?

Hi Cherilyn. It's Sam. I will take that question. Maybe the first thing I will say is just on the business itself. This is a high quality strategic asset in Australia. It provides and is this part of the whole backbone grid for the country. And as that country looks to electrify over the next 30 years, we think the investment opportunity in expanding that grid could total over $30 billion. And so there's meaningful CapEx to be invested. What we like about it is the fact that we are vesting at a point in time when allowed returns we think are at a trough level. And so we think the opportunity for higher returns as interest rates and inflation go up will be achieved by us. Obviously, given the regulated framework, the stability and predictability of the cash flow is very attractive. And it will be an investment that will be accretive for BIP. So as we look at developing an attractive portfolio composition for BIP, we think this nicely rounds out our investment activities for the year. We have added some midstream assets but this will give us some additional exposure to utilities which we think are very attractive for the company. So from that perspective, it fits very well with our investment objectives. As it relates to super core fund, our experience is that the super core fund does tend to invest in businesses that are at a return level slightly lower than what we look to invest at BIP. We think that there are opportunities to achieve returns at a level for this business that meet our return thresholds. But we also think from a portfolio composition perspective there's lots of qualitative reasons why it makes sense. As for other businesses that BSIP might invest in, it's hard to say whether or not there will be others that fall into this category where we would participate in.

Okay. That's helpful color. Effectively an opportunity to invest in the utility in an environment where there's a lot of competition for that type of asset. Maybe just on the topic of the asset sales, there's obviously a very robust environment for that. So I am curious whether there any businesses that are at a point with their value creation plan at BIP that you might consider accelerating your disposition plan to opportunistically take advantage of current market conditions?

So we are always looking at our portfolio and seeing if there are businesses that we can achieve full value sooner than later. I think I might have mentioned on the last call in fact that one of those businesses that we are thinking about accelerating the timeline of our modernization would be our transmission business in South America, in Brazil. We have made great progress in advancing that project. It's in fact a series of construction projects. It's highly sought after. We have had a number of the inbounds regarding that business. And yes, we are evaluating whether or not we accelerate that into 2022. That would probably the only one at this stage that I would flag. Otherwise, we have a plan over the next three to five years to generate over $5 billion of proceeds from asset sales. So we do have a robust divestiture plan. But that may be one business that we could accelerate.

Great. That's it for me. Thank you.

Thank you.

Thank you. And our next question comes from the line of Robert Kwan with RBC Capital Markets.

Good morning. If I can just start with the growth outlook that you put forward and you have got the long term 6% to 9% organic growth but in the near term you think you would be at the high end of that range. But I am wondering as you think about your asset rotation strategy, how do you see that contributing either to that 6% to 9% on maybe just an average annual basis long term as well as if you ex out the impact of IPL what do you think that could add as you think about the asset rotations in front of you over the next 12 to 24 months?

Yes. Hi Robert, it's David here. I can start with that one. In terms of the asset rotation strategy, I think when we typically look at going in capital deployment returns versus what we are able to monetize a matured derisked business, that is generally a pretty meaningful spread between the two, Robert. I think over the last three to five years, we probably average somewhere between 2% to 4% in terms of cap. I think we highlighted at Investor Day, this phase of asset rotation with coming out and IPL coming in is certainly outsized relative to our historical averages. So it will be -- that really leads us to that 20% growth when we look at it from in 2021 versus 2020 on a run rate basis that Sam alluded to. On a long term basis, I still think we view that we should be able to grow through asset rotation somewhere in that 2% to 4% annually and it just depends on the size and the quantum of the capital recycling that's being achieved and it can be somewhat lumpy. So you have a year like this where we have already done $2 billion in 2021 and have a further $1 billion as well for that. And we will have years like last year where we did maybe about $1 billion last year. So it is hard to say what any given year will be. But on average, you are looking at probably about $1 billion to $1.5 billion of asset sales at a 2% to 4% spread between buying and selling.

Maybe the only thing to add to that is, it also depends on what type of businesses we are selling because there are some businesses and we talked about these platform businesses where because they have a lot of embedded growth, we are selling at very low FFO yield. And so it does accentuate the growth. And so there was a lot of growth anyways. I would say our transmission business, given that most of the cash flows haven't come on but that will be held at a very low FFO yield. Probably PD Ports would be in that category as well. So there are some in the near term that would be very beneficial to the asset rotation story.

Got it. If I can just shift to midstream. I know you probably don't want to put hard targets out there. But I am just wondering, how big from a midstream segment perspective would be comfortably that as it relates to overall BIP? But the other one is, just taking a step back, there's a number of other assets that many investors would consider traditional midstream investments that you have sitting in other segments. So looking at kind of that definition, how big would you want to see that as a percentage of overall BIP's FFO?

It may not happen but Dave, you can jump in as well. Look I think our midstream segment is about 25% today. And typically over the last 10 or so years, 20% might have been a more typical level for us. But I think the best thing to focus on, Robert, is the fact that we like to take advantage of higher returning opportunities when they exist. We did this a number of years ago in Brazil where we made a number of big investments in gas transmission as well as the electricity transmission business. And so it felt like we were a little overweight in Brazil at that time. But then we haven't really done a lot since then in that market and in fact we will be looking to probably sell some of those businesses over the next couple of years. And so we will see South American content of our business fall pretty dramatically from where it was at one point. I suspect we will see the same things happen with midstream. There was some great opportunities in the market in the last little while which we took a badger but as they mature and we sell them off or just generate their cash flow, because a lot of them are being bought on a harvesting the cash flow basis, we will see that percentage drop down. And I would say, the vast majority of our pipeline of opportunities tend to, in fact, be directed towards that at the moment. And that is still a relatively minor amount of our overall investments but I see that as being the big area for growth in the next three to five years.

That's great. And if I can just finish with a specific question on IPL. Now that it's closed, I don't know if you are willing or able to talk a little bit more openly about it. But you did mention trying to help focus on your customers achieving net zero goals or decarbonizing. Just wondering what the interest is of using some of that IPL infrastructure joining what was supposed to be the Alberta Carbon grid to start with as well as just overall you making statements during the process about potentially carving up the assets. Was that something you kind of just offered up more so to try to get the deal done? Or was there a genuine interest as a Plan A, for lack of a better term?

Well, as it relates to the first part, maybe I will get Brian to comment on the carbon grid. But as it relates to carving the being the business up, look, I think we are very commercial on how we look at the business. We are trying to create value. And if there's opportunities for us to make more money by either in partnering or selling off businesses, we will consider all those avenues. And I would say, since we bought the business and been involved, we have had a tremendous amount of inbounds and outreach from mothers about opportunities. So we think all those possibilities still remain. We will look to optimize the business through those discussions. And that was what our plan always has been. So we will continue along that path and we will just have to see how those conversations with various parties pan out. But maybe, Brian, do you want to talk about the carbon?

Yes. I guess as it relates to call it the carbon grid or even just more broadly transition investing, it is something we have a high degree of interest in. I think these assets are well situated to be parts of solutions for customers. And these are a conversation, it's early days. We have only been in the seats at IPL for a couple weeks now. But there is a lot of interest in having those conversations from our side. And we are starting to have those conversations with various industry participants today. So we will continue to evaluate them and if we think there's good accretive investment opportunities for the business going forward, we will look to execute.

That's great. Thank you very much.

Okay. Thank you.

Thank you. And your next question comes from the line of Robert Catellier with CIBC Capital Markets.

Hi. Good morning. Rob Catellier from CIBC. Just a follow-up to that question-and-answer. So I take it then in terms of making investments in areas that are perhaps a little bit more carbon intensive, you are not afraid of making those investments, just I gather from your answer, especially if there's economic projects that could reduce emissions down on the road. Is that correct? Do I have the right look on that? So you won't shy away from investing just for the carbon intensity?

No. Look, absolutely, we are very cognizant of that direction going on in the world today. It's in the papers. It's in the discussions we have. And so that's not lost on us. But I think as we made it clear, the transition to reducing carbon is going to take a long period of time. And we own businesses that are critical for economy today and will be for the next couple of decades. All the investments we have made are in recognition of the broader goals of net zero by 2050. We will be harvesting a lot of cash flow during that period of time. And I think one of the things we will find is in many of the businesses that we own today, while we bought them on the basis of just harvesting cash flows for the next 20 to 30 years, many of them will be important pieces in the energy transition story and will require significant amounts of capital and will be very commercial for many decades beyond that. We don't know exactly what that would look like today. But we think these are critical businesses and they will be repurposed to fit into that new world. So that's the exciting story that we will be able to tell and others who own assets like ours in the future. But for today, we are investing with cash flows in mind and with those risk parameters fully on top of our of our minds.

Okay. And just was going back to the midstream portfolio for a minute. There's been a lot of changes there recently. So what level of commodity price exposure are you comfortable with? And now that you have IPL under the fold, where are the biggest exposures? And related to that, with the commodity prices at sub near highs, are you tempted at all to maybe accelerate monetization there?

So maybe I will ask Brian to touch on this. As you say, monetizations, I think what we are looking at doing is locking in some of these higher prices to improve what we had previously underwritten. So that's the real opportunity here, is the fact that a lot of our businesses that we recently bought are far more valuable today than they were when we bought them just in the last year or two, whether that's Sabine Pass or whether that's IPL, they are both doing extremely well. But Brian, maybe you want to talk about the hedging strategy we have in place at IPL today. I realize it's early days, so you are only starting. But it's something we are already started do but one that we are encouraging, I guess, to make sure we take advantage of these commodity prices.

Yes. I sure can, Sam. And look I would just maybe with most of our midstream businesses, we typically focus on businesses that are highly contracted. Sometimes we will have businesses where we will have some direct commodity exposure. And I think one of the things we always like to put in our pipeline was that the majority of the business is highly contracted for the long term. We do have some commodity exposure in the business and that's primarily through our fractionation facility and it's going to be through really exposure through a frac spread where we have some quality explosion in the business today. Given the fact that we already are in a very high commodity price environment, we are looking to hedge some of that exposure going forward to reduce our volatility and exposure to those prices changing over time. And we are quite comfortable doing that with where prices are today because they are so strong.

Right. So it's a question of optimization as opposed to portfolio management at this point in time?

Yes. That's a fair characterization.

All right. Last one for me. I am just curious on your indoor coverage solutions provided that you require. That's something that, how would you describe the affordability of those solutions to all the regions and businesses?

Well, maybe we will get Ben to talk about that because there's mainly two business upstream.

Yes. Look, there I would characterize as they are very affordable and our plans are to leverage that affordability into new markets and leverage the overall Brookfield franchise for deploying those indoor systems across various aspects of real estate in new markets. So our strategy for all of those businesses that have the indoor capability is to bring into new markets and expand their footprint and add elements of growth to them with those new geographies. So they are very affordable and that's one of the aspects that we really liked about them.

Yes. And just to remind you, the first indoor solution business we bought was as part of our at U. K. tower business which we have actually set up a business in the U.S. We signed our first contract in the West Coast with a Brookfield property and we are looking at building that business in North America. So that's a perfect example where we have taken a European business and actually brought it to North America. And we will be able to do something similar probably with that business in India. That's a big market opportunity. But hopefully we can transport it to different parts of Asia.

Okay. That's it for me. Thank you very much.

Yes. Thank you.

Thank you. And our next question comes from the line of Devin Dodge with BMO Capital Markets.

All right. Thanks. So maybe to start with a question on NTS. There were some regulatory changes in the Brazilian natgas market earlier this year around converting some concessions to indefinitely live assets and I think creating more competition for building pipelines going forward. Just can you speak to those regulatory changes and whether you see them as risks or opportunities for NTS?

Yes. Devin, it's Ben here. We definitely see them as opportunities for NTS. When we bought NTS many years ago, there really was no open market regulated framework in the country. The country was just evolving from basically a vertically integrated energy structure through Petrobras into trying to get ensured market participants could add assets to the networks over time in an open access framework. And these regulations were many years in the making. And we actively participated in discussions with the regulators about how everyone's goal is to ensure that the energy market in Brazil especially for natural gas would grow. And so we are very pleased with the regulations. As you mentioned, I think the two key attributes are, first of all, they make our NTS franchise a perpetual asset base rather than concession based which allows us to invest over the long, long term. And the second thing is, it makes it much easier for new entrants to come into the Brazilian market and effectively compete in a market where Petrobras otherwise was dominant. And we think that will provide lots of growth opportunities, not only for domestic and industrial consumption but for power, natural gas, to play a role in power generation in the country. So we are pretty, I would say, excited by the whole evolution and we think it will provide good growth for NTS over time.

Okay. That's good color. Thanks for that. Maybe a question for Dave. Look, we have seen a lot of discussions between construction companies and project owners around covering, I will say, extra cost, whether it's productivity losses around COVID, material cost inflation, higher wages, et cetera. Just it's not clear at least how these negotiations will go. But I think it's fair to say that the cost to complete projects are going up. Now for BIP, is there a risk that the returns over the yields on capital projects currently in your backlog, could they be less than what you have seen historically?

Hi Devin. I think if we look at our backlog today and I mean about 80% of it today are small last mile connection around the edges where we are constantly repricing every few weeks or months and capturing some of those inflationary pressures on our costs through to our customers. So I would say, the vast majority of our backlog shouldn't be impacted from going in FFO yield standpoint or an IRR that we have underwritten at. So those are the businesses like BUUK, like CDS. So I would say, those are the BIPs and those are really the flagship components of our backlog. If we think of some of the larger capital initiatives that are more transient and one-off, I think a great example is how we manage that construction risk would be in Brazil with our transmission lines where we do have an offtaker in terms of the construction management company. They bear the risk of cost overruns and we get rebalanced through our acquisitions. So I think we have done a great job in managing some of those projects where we could have had those types of conversations as we are experiencing those inflationary pressures in the current environment for the most part. I wouldn't expect it to impact the returns that we expect these projects to generate. And I think these are some of the best risk adjusted returns we can find. So I think we are in pretty good shape.

Okay. Thanks a lot. I will turn it over.

Thank you. And our next question comes from the line of Rob Hope with Scotiabank.

Good morning everyone. Just on the potential decision to accelerate the South American asset sale process there in addition to your other processes. Is this just a function of value you are seeing in the market? Or does is also tie to the opportunities that you are seeing to acquire some assets as well as provide liquidity for that?

Sorry. You cut off there. I think the question was, are we accelerating that divestiture just, I think it was from a risk perspective?

No. Maybe is it just related to the value you are seeing the market? Or does it actually tied to incremental M&A opportunities you can put capital to work?

No. Look, I think we are just seeing good value for those types of businesses. There's a very strong demand and we have had numerous inbounds regarding the business. We are nearing, I mean we would have in any event probably looked to sell the business maybe in 2023. So we are not massively accelerating the divestiture of that business. We are just pulling it forward a little bit. But from a liquidity perspective, yes, we have lots of levers for liquidity. So it really isn't from that perspective. It really is just value.

All right. Thanks. And then just a longer term question. You will be investing alongside the super car find and as Brookfield hasn't been diversified its overall fund portfolio including a global transition fund, could we see BIP investing alongside other funds? Or do you have enough capital to put to work at BIP 4 as well as what should be a larger Brookfield Infrastructure Fund 5?

Look, I can't say definitively but for the most part, the vast majority of our investment opportunities will come through our flagship BIP4, BIP 5 series of funds. There will be the odd utility type investment that will participate through the super core fund. And it's too early to comment on the transition fund. I think the vast majority of those investments will be renewables related and so likely will go through BIP. But I guess we will wait and see what services.

All right. That's it for me. Thank you.

Okay. Thank you.

Thank you. And our next question comes from the line of Naji Baydoun with IA Capital Markets.

Hi. Good morning. I just wanted to start off with the interest rates and asset sales. I appreciate deals are going to remain low but with expectations of the moving up, are there any pressing or time sensitive refinancings you think you need to complete in the next year or so?

Hi Naji. It's Dave. I can start on that one. I think, look, we have been pretty vocal in our plan. For the last, I would say, 24 months, we have been very active on the refinancing front. As I alluded to, it's probably over $10 billion that we have done this year alone across our businesses. And predominantly, none of those were maturities in this year. Most of them were either 2022, 2023 that we are getting ahead of. With that in mind, I think we are always looking at managing that risk, certainly on interest rates for a long term basis. And certainly at the corporate level, we have nothing until 2024. And at our businesses, there's no material financings in the next 12 months that we are not working on today that we are worried about there. So I think we have been very proactive on that front and our balance sheet is in excellent position with that as the prevailing sentiment around interest rates and where they are headed.

Okay. Good. And I guess just related to this but on the asset sales, you have highlighted the potential value of the platform businesses that you are building. And I guess my question is, being able to sell these businesses at higher multiples, how much of value you attribute to just being today in the lower interest rate environment versus maybe the added value you bring to the franchise? And I guess, does it just mean that even if you sell assets at a higher multiples, you are also paying higher multiples for new investments and net net back to earlier comment you are still doing 2% to 4% spread?

Well, look, that's a fair comment. This is Sam, by the way. In regards to your first comment about how much is environment related, just low interest rates and pushing valuations up versus selling growth, the relative split is difficult to answer. I think there's a combination probably of both factors. Buyers are using more leverage today to be able to pay more. So there's a very constructive capital markets getting into valuations. At the same time, we are selling businesses where we have built great platforms and people are happy to pay for growth. So I think we are benefiting from both factors and they are both important. As it relates to us on the buy side, look, I think we always try to limit the amount of goodwill that we pay for. We try to create it not buy. But there's no doubt some level of future growth, we do need to factor into any investment we make to be competitive. And we just try to be prudent. There's many transactions we are not successful on. We try to pick and choose those ones where we can leverage other considerations and factors to be successful. And I think IPL is a good example where we were able to buy a toehold and position ourselves in a different way, also by the time when midstream was a little bit more out of favor. So those are the types of things we try to do so that we are not giving back, I think is what you are implying some of those gains that we make on the sell side when we buy new assets. Hope that's helpful.

That's great. Thanks Sam. Just a quick final question on data. With this bolt-on small acquisition in India, I think that's in your existing business but the JV with Digital Realty is now also closed. I am just wondering how you are thinking about investments in both of those call them vehicles going forward in India?

Both are very early days. Yes, you are right. The indoor solutions business was bought as part of the towers platform. And given the size of the towers platform, it's very modest in comparison. We do think it's a good tuck-in to that business and positions us well for some highly accretive growth. But it may not move the needle too much in the near term. We hope longer term it becomes more meaningful. So I would manage expectations in that regard. And the JV with Digital Realty is in the early innings. We are excited by the growth potential in the market and the powerful combination of our franchise and their franchise and being able to grow that. At this stage, we are really just building up a pipeline of land in various key markets and we hope to have contracts signed to develop those land parcels over the coming quarters. But it's early days. Look forward to giving you more feedback on that. But again, I think the financial impact from that initiative will be in the years ahead. You will not see it in the short run. These are all little seeds that we are planting that we think will be very meaningful for the company in the future.

Got it. Thank you very much.

Thank you. Now I am showing no further questions at this time. I will now turn the call back over to Chief Executive Officer, Sam Pollock, for any closing remarks.

Okay. Thank you operator and thank you for everyone who joined the call this morning and we appreciate your ongoing support. I appreciate we may not speak again until the New Year. So in that regard, we would like to wish everyone happy holidays and all the best for the remaining part of the year. Thank you.

This concludes today's conference call. Thank you for participating and you may now disconnect.