Net leverage ratio

At the December 2018 Capital Markets Day, we reconfirmed our leverage framework, maintained at 3.5x to 4.5x Net Total Debt to Consolidated Annualized EBITDA ("net total leverage1"). In absence of any material acquisitions and/or significant changes in our business or regulatory environment, we intend to stay around the 4.0x mid-point through an attractive and sustainable level of shareholder disbursements.

At March 31, 2019, our net total leverage ratio reached 4.4x versus 4.1x at December 31, 2018. The relative step-up in our net total leverage ratio reflects (i) our seasonally lower Adjusted Free Cash Flow in Q1 due to the annual cash tax payment and the semi-annual settlement of cash interests on certain debt instruments in January, (ii) a relatively softer Consolidated Annualized EBITDA, which is based on the last two quarters, (iii) continued share repurchases under our €300.0 million Share Repurchase Program 2018bis, which is expected to be completed end-June 2019 and (iv) a further increase in our vendor financing program, which we expect to unwind in the course of the year.

Our net covenant leverage2, as calculated under the 2018 Amended Senior Credit Facility and which includes certain unrealized M&A-related cost synergies with regards to the June 2017 SFR Belux acquisition and excludes both lease-related liabilities and vendor financing-related short-term liabilities, remained broadly stable at 3.5x at March 31, 2019 (December 31, 2018: 3.4x). Our current net covenant leverage ratio is significantly below the springing maintenance covenant of 6.0x and the incurrence test of 4.5x net senior leverage.

1. Net total leverage is defined as the sum of all of the Company's short-term and long-term liabilities minus cash and cash equivalents ("Net Total Debt"), as recorded in the Company's statement of financial position, divided by the last two quarters' Consolidated Annualized EBITDA.

2. Net covenant leverage is calculated as per the 2017 Amended Senior Credit Facility definition, using Net Total Debt, excluding (i) subordinated shareholder loans, (ii) capitalized elements of indebtedness under the Clientele and Annuity Fees, (iii) any finance leases entered into on or prior to August 1, 2007, (iv) any indebtedness incurred under the network lease entered into with the pure intermunicipalities and (v) any vendor financing-related liabilities, divided by last two quarters’ Consolidated Annualized EBITDA including certain unrealized cost synergies related to the BASE and SFR Belux acquisitions.