GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2019

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

9. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company tests goodwill for impairment at each of its reporting units on an annual basis, which has been determined to be as of October 1st. The Company has historically completed our goodwill impairment assessment of its reporting units as of December 31st. To better align with the Company’s annual internal planning and budgeting process, the Company changed its annual goodwill impairment assessment for all reporting units to be as of October 1st. The Company’s reporting units are one level below its operating segments. The Company also tests goodwill between annual tests if an event occurs or circumstances change that indicate that the fair value of a reporting unit may be below its carrying value.

The Company’s qualitative goodwill impairment test includes, but is not limited to, assessing macroeconomic conditions, industry and market considerations, technological changes and trends, and overall financial performance of the reporting unit. The Company’s quantitative test for goodwill impairment involves a comparison of the estimated fair value of a reporting unit to its carrying amount, including goodwill. The Company determines the fair value of a reporting unit using either a market or income approach. The market approach uses prices generated by market transactions involving comparable businesses. The income approach is based on a discounted cash flow (“DCF”) model. The DCF model requires the exercise of significant judgment, including judgments and assumptions about appropriate discount rates and revenue growth. Discount rates are based on a weighted-average cost of capital (“WACC”), which represents the average rate a business must pay its providers of debt and equity. The revenue growth and cash flows employed in the DCF model were derived from internal earnings and forecasts and external market forecasts.

During the fourth quarter of 2019, as part of the Company’s strategic assessment of its reporting units and the strategic alternatives available in its operating markets, the Company recorded a goodwill impairment of $3.3 million in the Renewable Energy segment. The impairment assessment was based on a market approach. The Company concluded that the fair value of the reporting unit exceeded its carrying amount by an amount in excess of the reporting unit’s goodwill. As a result, a goodwill impairment was recorded to reduce the value of the goodwill to zero.

For its annual impairment analysis of its remaining reporting units, as of October 1, 2019, the Company performed a quantitative analysis using a DCF model and determined that the carrying amounts of its reporting units, including goodwill, did not exceed their respective fair values and therefore, no additional impairment existed. For all reporting units, except for Viya, there was significant headroom in the impairment analysis. Based on the results of this test for Viya, the fair value of this reporting unit exceeded its carrying value by approximately 12%, and accordingly a relatively small change in the underlying assumptions, including the revenue growth and the discount rate, would likely cause a change in the results of the impairment assessment and, as such, could result in an impairment of the goodwill related to Viya, for which the carrying amount is $20.6 million.

The Company’s impairment testing for 2018 and 2017 concluded that no impairments were necessary for any reporting units.

The table below discloses goodwill recorded in each of the Company’s segments and accumulated impairment changes (in thousands):

	International		US		Renewable
	Telecom		Telecom		Energy		Consolidated
Balance at December 31, 2017	$	24,326	$	35,268	$	3,279	$	63,970
Acquisitions		—		—		—		—
Balance at December 31, 2018		24,326		35,268		3,279		63,970
Impairment		—		—		(3,279)		(3,279)
Balance at December 31, 2019	$	24,326	$	35,268	$	—	$	60,691
	International		US		Renewable
	Telecom		Telecom		Energy		Consolidated
Balance at December 31, 2018
Gross	$	24,326	$	35,268	$	3,279	$	63,970
Accumulated Impairment		—		—		—		—
Net		24,326		35,268		3,279		63,970
Balance at December 31, 2019
Gross		24,326		35,268		3,279		63,970
Accumulated Impairment		—		—		(3,279)		(3,279)
Net	$	24,326	$	35,268	$	—	$	60,691

Telecommunications Licenses

The Company tests those telecommunications licenses that are indefinite lived for impairment on an annual basis, which has been determined to be as of October 1st. The Company has historically completed our license impairment assessment as of December 31st. To better align with the Company’s annual internal planning and budgeting process, the Company changed its annual license impairment assessment to be as of October 1st. The Company also tests telecommunication licenses that are indefinite lived between annual tests if an event occurs or circumstances change that indicate that the fair value of a reporting unit may be below its carrying value.

The Company’s qualitative impairment test includes, but is not limited to, assessing macroeconomic conditions, industry and market considerations, technological changes and trends, overall financial performance, and legal and regulatory changes. The Company’s quantitative test for impairment involves a comparison of the estimated fair value of an asset to its carrying amount. The Company determines the fair value using either a market or income approach. The market approach uses prices generated by market transactions involving comparable assets. The income approach uses a DCF model. The DCF requires the exercise of significant judgement including Level 3 valuation inputs.

The Company performed qualitative assessments for its annual impairment assessment of its indefinite lived telecommunications licenses for 2019 and determined that there were no indications of potential impairments. The Company’s impairment testing for 2018 and 2017 also determined that no impairments were required for any telecommunication licenses.

The changes in the carrying amount of the Company’s telecommunications licenses, by operating segment, were as follows (in thousands):

	International		US
	Telecom		Telecom		Consolidated
Balance at December 31, 2017	$	23,347	$	72,605	$	95,952
Acquired licenses		—		485		485
Dispositions		—		(2,751)		(2,751)
Balance at December 31, 2018	$	23,347	$	70,339	$	93,686
Acquired licenses		—		—		—
Dispositions		—		—		—
Balance at December 31, 2019	$	23,347	$	70,339	$	93,686

The licenses acquired during 2018 are expected to be available for use into perpetuity.

Customer Relationships

The customer relationships, all of which are included in the International Telecom segment, are being amortized on an accelerated basis, over the expected period during which their economic benefits are to be realized. The Company recorded $1.8 million, $2.4 million, and $3.2 million of amortization related to customer relationships during year ended December 31, 2019, 2018, and 2017, respectfully.

Future amortization of customer relationships, in its International Telecom segment, is as follows (in thousands):

	Future Amortization
2020	$	1,528
2021		1,300
2022		1,143
2023		827
2024		576
Thereafter		2,067
Total	$	7,441

Other Intangible Assets

The Company has other intangible assets of $4.5 million consisting of $3.0 million of franchise rights and $1.5 million of tradenames in its International Telecom segment. These assets are recorded in other assets on the Company’s balance sheet as of December 31, 2019.