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Interview with Francisco Reynés Massanet, CEO of Abertis from the World Economic Forum 2017

Following are excerpts from a CNBC interview with Francisco Reynés Massanet, CEO of Abertis from the World Economic Forum 2017 with Geoff Cutmore and Steve Sedgwick

GC: Let's move on, let's talk a little bit about infrastructure. President Elect Donald Trump has pledged to increase infrastructure spending to fuel economic growth. The promised spending could provide a boost to the American business of toll road operator Abertis. Wouldn't it be really good if we just had someone from Abertis to talk about it?

SS: Who would be mad enough to join us at this hour, though?

GC: I can only think Francisco Reynés Massanet would do it, good morning to you.

FM: Hi, good morning.

GC: Welcome, thanks very much for coming in.

FM: Thanks very much.

GC: So are you very excited that Donald Trump is talking about big expenditure on infrastructure? What does it mean for Abertis?

FM: Well, I'm very excited that every key politician is talking about infrastructure, but it's our business. We are in 20 countries and we expect to be in much more. We don't know yet exactly what that means, we will see from tomorrow onwards what the commitment of this government about infrastructure means. But what we can offer to the States, and to all the countries in the world, is a clear commitment on having long-term sustainability infrastructures, and our business is about managing the infrastructures on a long-term perspective.

GC It sounds to me as though you're saying, 'We'll believe it when we see it,' and quite frankly I understand that, because we've heard a lot of American politicians over the recent years saying, 'We need to spend money in this country,' but it's just not happening. So are you more convinced that it may trickle through now, because Donald Trump sounds like a different kind of President?

FM: Well, it's not about the people, it's about the facts. We tried to come into the States 10 years ago with a big infrastructure, which was the Indiana Toll Road, and after having won the bid, for whatever reason, the governor decided not to go ahead. Then we tried again in some attempts in Chicago, in Pennsylvania, but what happened is that finally it's difficult, because the American market is a very difficult market, although it really requires PPPs as a way to boost the lack of infrastructures. They made a lot of infrastructures, but they were some years ago, a lot of years ago, and they need to be updated.

SS: It seems incredible to say so, in such a sophisticated, tech-savvy country, but is the American infrastructure in, you mentioned Indianapolis and other places, is it actually very, very poor? Because that is the feeling I'm getting from many people in the States, who say, 'Actually, it's really, really bad conditions at the moment,' and in fact compared with Europe, compared with certainly the growth in Asia, as well, they need a revolution.

FM: The maintenance of your construction is about money, and it's about money on a sustainable basis. You cannot expect to have a great infrastructure but without spending the proper amount of money on the maintenance on a regular basis, infrastructures are really becoming obsolete. And I think that in any country, it needs to be included in the public budget, and normally when you need to restrict your expenditures, they go to the maintenance side. That's what a business is about.

SS: Sure. So where are you excited about at the moment? Where is the area? I mean, obviously people say Asia, fantastic, they're always looking to grow their infrastructure aggressively, as well, but I there somewhere that you think, 'This is the part of the business I see the greatest excitement in 2017'?

FM: We are really excited with countries where the governments are really prepared to work on a public/private partnership with a completely strong legal framework.

SS: Give us a great example.

FM: Well, in Europe we have countries like France or Italy, where infrastructures are clearly managed by private operators, or in South America you have countries like Brazil, Chile, Mexico, where you have this type of commitment. Asia is coming, but as you have seen during these days in Davos, there is a lot of expectation about the infrastructures coming in Asia, but still in hands of governments, and they need to go through the private investors.

GC: And let me ask you about Europe. We know that governments in Europe, Italy, Spain, Portugal, have been struggling to spend money because they just don't have it. Give us your sense, are we seeing a recovery in these economies, and will that start to trickle through to an increase in infrastructure spending?

FM: We are seeing the recovery, I think that I am not the first one to say that. The IFM said, yes, for example, that Spain is going to grow more than expected, which is good news. What we need to make compatible is that this overall growth as a country, it goes to the infrastructure side, as well, and one of the big challenges the infrastructure market has today, in Europe, is not more to do it, but to maintain that infrastructure side, which is going to the yearly public budget, and as you know, Brussels is really pressing to reduce the deficit, and they need to find that somewhere.

SS: Just very quickly, a European public which is feeling itself very squeezed, a middle class that's feeling it's very squeezed, are they prepared for paying for more on toll roads than ever before, because in places where they haven't had to have these kind of expenses?

FM: The key question is: who pays? Because there is nothing free. Either it's paid through the taxes, or it's paid by the drivers, and what do you think makes more sense? That if you drive 200km, you pay for these 200? Or you stay at home, you pay part of the drivers that are driving 200km? That's what the infrastructure payments

SS: It's a good point. Have you done the M61?

GC: Yes I have.

SS: It's a joy, isn't it?

GC: It is a joy.

SS: 18 miles of joy.

GC: Yes, because nobody else wants to pay. Francisco, a real pleasure. Good to see you this morning. Thanks very much for joining us.

FM: Thank you very much.