GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2021

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

7. 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 rates. 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, 2021 and 2020, the Company performed a qualitative analysis for all reporting units other than its Viya reporting unit. The qualitative analysis was completed after the previous quantitative analysis using a DCF model determined that the fair value of each reporting unit significantly exceeded its carrying value, including goodwill. For these reporting units, the qualitative analysis concluded that no impairment was necessary in either 2021 or 2020.

For the Company’s Viya reporting unit, its 2020 and 2019 impairment analysis determined that its fair value exceeded its carrying value, including goodwill, by 9% and 12%, respectively. As a result the Company performed a quantitative analysis and determined the fair value of the Viya reporting unit using the income approach during 2021. Based on the results of this test for Viya, the carrying value of the reporting unit, including goodwill, exceeded its fair value. The value of the reporting unit decreased in 2021 mainly due to decreases in government funding and changes in the operating environment of the reporting unit that resulted in the reporting unit being unable to achieve its growth projections. As a result the Company recorded an impairment of $20.6 million representing all of the goodwill in this reporting unit.

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 sold in 2021. Refer to Note 5.

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

	International		US
	Telecom		Telecom		Consolidated
Balance at December 31, 2019	$	25,423	$	35,268	$	60,691
Impairment		—		—		—
Balance at December 31, 2020		25,423		35,268		60,691
Impairment		(20,587)		—		(20,587)
Balance at December 31, 2021	$	4,836	$	35,268	$	40,104
	International		US
	Telecom		Telecom		Consolidated
Balance at December 31, 2020
Gross	$	25,423	$	35,268	$	60,691
Accumulated Impairment		—		—		—
Net		25,423		35,268		60,691
Balance at December 31, 2021
Gross		25,423		35,268		60,691
Accumulated Impairment		(20,587)		—		(20,587)
Net	$	4,836	$	35,268	$	40,104

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 quantitative assessments for its annual impairment assessment of its indefinite lived telecommunications licenses for 2021 using a market approach and determined that there were no indications of potential impairments. The Company’s qualitative impairment testing for 2020 and 2019 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, 2019	$	23,347	$	70,339	$	93,686
Acquired licenses		200		20,197		20,397
Transfers		11,251		(11,251)		—
Balance at December 31, 2020	$	34,798	$	79,285	$	114,083
Acquired licenses		—		683		683
Dispositions		—		(1,000)		(1,000)
Balance at December 31, 2021	$	34,798	$	78,968	$	113,766

The licenses acquired during 2021 and 2020 are expected to be available for use into perpetuity.

Customer Relationships

The customer relationships are being amortized on an accelerated basis, over the expected period during which their economic benefits are to be realized. The Company recorded $7.0 million, $1.5 million, and $1.8 million of amortization related to customer relationships during the years ended December 31, 2021, 2020, and 2019, respectively.

Future amortization of customer relationships is as follows (in thousands):

	International Telecom		US Telecom
2022	$	1,143	$	10,424
2023		827		10,248
2024		576		5,748
2025		576		2,778
2026		576		—
Thereafter		915		—
Total	$	4,613	$	29,198

Other Intangible Assets

Other intangible assets includes $10.5 million and $1.1 million of tradenames on the Company’s balance sheet as of December 31, 2021 and 2020, respectively.

The tradenames have definite lives and future amortization of the tradenames are as follows:

	International Telecom		US Telecom
2022	$	307	$	984
2023		307		936
2024		307		876
2025		307		816
2026		208		708
Thereafter		38		4,688
Total	$	1,474	$	9,008