Overview...Brookfield Infrastructure Partners L.P.

Overview...Brookfield Infrastructure Partners L.P.

During the quarter, the global economy experienced a sharp retraction due to various measures imposed by governments. Over the past month, we have been encouraged by the return of economic activity with the gradual reopening of economies. While many sectors have been hard hit, the infrastructure sector has demonstrated its very high resiliency of cash flows. As we communicated previously, each of our businesses was deemed essential and has provided largely uninterrupted service throughout this challenging period.

Brookfield Infrastructure generated Funds from Operations (FFO) totaling $333 million in the second quarter, which was relatively consistent with the prior year. Our assets performed well on a local currency basis and only a very small portion of our overall revenue was affected by the global economic shutdown. Results reflect certain timing impacts that should be recovered over time. These include delays recognizing earnings associated with the buildout of a contracted backlog of projects in our U.K. connections business, and reduced traffic on our toll roads, for which we expect to be fully compensated under force majeure provisions in our concession agreements.

Across all geographies where we have GDP sensitive revenues, we have seen strong recoveries in volumes once restrictions were lifted. While we are pleased with the faster than expected recovery, many of these businesses are not fully back to pre-covid levels as certain safety protocols are inhibiting productivity at construction sites and commuter traffic levels are still impacted by employees continuing to work from home. We may not see a full recovery until later in the year or early 2021. However, barring any further shutdowns, the impact of the economic slowdown on Brookfield Infrastructure’s results in the next few quarters should be modest.

Over the past several months we have seen a significant rise in the stock market, as well as the recapitalization of numerous businesses impacted by the slowdown. Consequently, infrastructure asset values have held up and companies that we expected to sell assets to raise liquidity took on more debt as they were able to access the debt markets. Nonetheless, we have a strong pipeline of investment opportunities to deploy our capital and we remain patient in anticipation of large value opportunities that we believe will arise once stimulus measures abate. We have also relaunched various asset monetization opportunities, as the investment market for high quality essential businesses is robust. The stable performance of our mature assets throughout the height of the volatility underlines the value of essential infrastructure businesses. Consequently, we expect high levels of interest from prospective buyers.

 Outlook

Our outlook for the balance of the year is more optimistic than when we last reported in May. While we remain cautious with respect to potential setbacks in the global recovery, we are encouraged by the pace of reopening and strong performance of our businesses. Results for our assets that have volume exposure have been, for the most part, quicker to rebound than we initially anticipated. At many of our businesses, results are ahead of plan for the year as communities emerge out of lockdown and economic activity ramps up further. While our payout ratio in the first half of 2020 is higher than our target range, we believe it will normalize as economic conditions improve and the Indian telecom tower transaction closes. We expect this acquisition to be accretive to our overall cash flows.

In the second half of 2020, we will focus on the execution of capital recycling initiatives. We are confident that the merits of investing in mature, de-risked, cash flow producing infrastructure assets will be more appealing to prospective buyers than ever – particularly with the expectation for low interest rates for the foreseeable future.

Our investment teams around the world are pursuing a number of large and strategic investment opportunities as well as follow-on acquisitions. An ongoing area of focus for us is on data infrastructure. We believe the sector offers significant opportunities given the large-scale investments required to replace the aging copper infrastructure with fiber and upgrade wireless networks to the new 5G standards. With increasing demands placed on their capital, telecom operators are looking for funding partners to reduce the strain on their balance sheets and deliver the next generation networks required to support an increasingly interconnected society. We remain patient in this regard but believe we have laid a substantial amount of groundwork and will aim to advance these opportunities in the coming months. Our liquidity position, combined with access to several sources of capital, will allow us to move quickly when a catalyst emerges for such transactions.

On behalf of the Board and management of Brookfield Infrastructure, we thank our unitholders and shareholders and wish you continued health.

 Sam Pollock

Chief Executive Officer

Brookfield Infrastructure partners L.P.

August 5, 2020