GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2020

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

8. 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’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.

For its annual impairment analysis, as of October 1, 2020, the Company performed a qualitative analysis for all reporting units other than its Viya reporting unit. The qualitative analysis was completed after the 2019 quantitative analysis using a DCF model determined that the fair value of each reporting unit significantly exceeded its carrying value, including goodwill. The qualitative analysis concluded that no impairment was necessary in 2020. For the Company’s Viya reporting unit, its 2019 impairment analysis determined that its fair value exceeded its carrying value, including goodwill, by 12%. As a result the Company performed a quantitative analysis using a DCF model for this reporting unit during 2020. Based on the results of this test for Viya, the fair value of this reporting unit exceeded its carrying value by approximately 9%, 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.

During 2019, 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. The assets in this reporting unit were reported as held for sale at December 31, 2020. Refer to Note 6.

The Company’s impairment testing for 2018 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, 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
Impairment		—		—		—		—
Balance at December 31, 2020	$	24,326	$	35,268	$	—	$	60,691
	International		US		Renewable
	Telecom		Telecom		Energy		Consolidated
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
Balance at December 31, 2020
Gross		24,326		35,268		—		60,691
Accumulated Impairment		—		—		—		—
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 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 2020 and determined that there were no indications of potential impairments. The Company’s impairment testing for 2019 and 2018 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, 2018	$	23,347	$	70,339	$	93,686
Acquired licenses		—		—		—
Dispositions		—		—		—
Balance at December 31, 2019	$	23,347	$	70,339	$	93,686
Acquired licenses		200		20,197		20,397
Dispositions		—		—		—
Transfers		11,251		(11,251)		—
Balance at December 31, 2020	$	34,798	$	79,285	$	114,083

The licenses acquired during 2020 and 2019 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 $1.5 million, $1.8 million, and $2.4 million of amortization related to customer relationships during year ended December 31, 2020, 2019, and 2018, respectively.

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

	Future Amortization
2021	$	1,300
2022		1,143
2023		827
2024		576
2025		576
Thereafter		1,491
Total	$	5,913

Other Intangible Assets

The Company has other intangible assets of $3.0 million consisting of franchise rights and $1.1 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, 2020 and 2019, respectively.