Net leverage ratio

NET LEVERAGE RATIO

Mid-February, we redefined our leverage framework, maintained at 3.5x to 4.5x Net Total Debt to Consolidated Annualized EBITDA and based on net total leverage as opposed to net covenant leverage previously. As such, our Consolidated Annualized EBITDA excludes certain unrealized OPEX synergies with regards to both the BASE and SFR Belux acquisitions, while Net Total Debt includes both lease-related liabilities and vendor financing-related short-term liabilities. 

At September 30, 2018, our net total leverage ratio reached 3.6x versus 3.8x at June 30, 2018 with the decrease being primarily attributable to the strong EBITDA growth we achieved in the third quarter and a decrease in our outstanding vendor financing commitments due to phasing. Our net total leverage ratio at September 30, 2018 did not yet reflect the payment of the €600.0 million extraordinary gross dividend, which was only paid on October 4, 2018. On a pro forma basis to reflect the impact of the October 2018 extraordinary dividend payment, our net total leverage ratio would have been 4.0x at the end of the third quarter, which represents the mid-point of the aforementioned leverage framework. 

Our net covenant leverage, which includes certain unrealized OPEX synergies and excludes both lease-related liabilities and vendor financing-related short-term liabilities, further decreased to 2.9x at September 30, 2018 (June 30, 2018: 3.0x). On a pro forma basis to reflect the impact of the October 2018 extraordinary dividend payment, our net covenant leverage ratio would have been 3.4x at the end of the third quarter. 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.