We perform impairment tests related to our goodwill annually as of December 31, or sooner if an indicator of impairment occurs. The decline in our stock price, our profitability, and the outlook of our business during the second and third quarter of 2019 were each triggering events that required an impairment assessment as of June 30, 2019 and September 30, 2019.

We use a market multiples approach to determine Frontier’s enterprise fair value for purposes of assessing goodwill for impairment. Marketplace comparisons, analyst reports and trends for other public companies within the telecommunications industry whose service offerings are comparable to ours have a range of fair value multiples between 4.1x and 7.6x of annualized expected EBITDA as adjusted for certain items. At September 30, 2019, we estimated the enterprise fair value using an EBITDA multiple of 4.4x.

Our quantitative assessment indicated that the carrying value of the enterprise exceeded its fair value as of September 30, 2019, and, therefore, an impairment existed. This impairment reflected a lower enterprise valuation driven by lower profitability. This reflects, among other things, pressures on our business resulting in a continued deterioration in revenue, challenges in achieving improvements in revenue and customer trends under our transformation program, the long-term sustainability of our capital structure, and the lower outlook for our industry as a whole.

The market multiples approach we use incorporates significant estimates and assumptions related to our forecasted profitability, principally revenue and operating expenses. Our assessment also includes certain qualitative factors that require significant judgment, including challenges in achieving improvements in revenue and customer trends under our transformation program, the amount and timing of other anticipated transformation benefits, and uncertainty regarding the timing and successor to the FCC’s CAF Phase II program. Alternative interpretations of these factors could have resulted in different conclusions regarding the need for, or size of, an impairment.

We also considered whether the carrying values of finite-lived intangible assets and property plant and equipment may not be recoverable or whether the carrying value of certain indefinite-lived intangible assets were impaired, noting no additional impairment was present as of September 30, 2019.

As a result of this assessment, we impaired the $276 million remaining balance of our goodwill during the three months ended September 30, 2019.

We recorded goodwill impairment of $5,449 million in the three-month period ended June 30, 2019, which was based on the amount that Frontier’s enterprise carrying value exceeded its fair value. This impairment reflected a lower enterprise valuation driven by lower profitability as well as a reduction in the utilized market multiple from 5.3x at December 31, 2018 to 4.4x at June 30, 2019.

The changes in the carrying amount of goodwill, net for the nine months ended September 30, 2019 was as follows:



($ in millions)

Balance at January 1, 2019	$	6,383
Reclassified as held for sale ⁽¹⁾		(658)
Goodwill impairment		(5,725)
Balance at September 30, 2019	$	-

⁽¹⁾ Represents the amounts reclassified as held-for-sale related to the Company’s Northwest Operations. See Note 7.

Accumulated goodwill impairment charges were $9,154 million and $3,429 million as of September 30, 2019 and December 31, 2018.



	September 30, 2019						December 31, 2018
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
($ in millions)	Amount		Amortization		Amount		Amount		Amortization		Amount

Other Intangibles:
Customer base	$	4,332	$	(3,356)	$	976	$	5,188	$	(3,848)	$	1,340
Trade name		122		-		122		122		-		122
Royalty agreement		72		(50)		22		72		(40)		32
Total other intangibles	$	4,526	$	(3,406)	$	1,120	$	5,382	$	(3,888)	$	1,494



	For the three months ended September 30,				For the nine months ended September 30,
($ in millions)	2019		2018		2019		2018

Amortization expense	$	101	$	134	$	344	$	437