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Goodwill, Customer Relationships and Other Intangible Assets | 12 Months Ended
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Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill, Customer Relationships and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill and other intangible assets consisted of the following:
| As of December 31,
| 2023 |  | 2022
| (Dollars in millions)
Goodwill(1) | $ | 6,955 |  |  | $ | 9,360 |
Other intangible assets, less accumulated amortization of $1,966 and $1,924 | $ | 103 |  |  | $ | 138 |
______________________________________________________________________ (1)We recorded a cumulative non-cash, non-tax-deductible goodwill impairment charge of $2.4 billion during the year ended December 31, 2023. As of December 31, 2023, the gross carrying amount of goodwill and other intangible assets was $9.0 billion. Substantially all of our goodwill was derived from Lumen's acquisition of us where the purchase price exceeded the fair value of the net assets acquired. We are required to assess our goodwill for impairment annually, or under certain circumstances, more frequently, such as when events or changes in circumstances indicate there may be impairment. We are required to write down the value of goodwill only when our assessment determines the carrying value of equity of our reporting unit exceeds its fair value. Our annual impairment assessment date for goodwill is October 31, at which date we assess goodwill at our reporting unit. In reviewing the criteria for reporting units, we have determined that we are one reporting unit. 2023 Goodwill Impairment Analyses At October 31, 2023, we performed our annual impairment analysis of our reporting unit. Given the continued decline in Lumen's share price, we determined our quantitative impairment analysis would estimate the fair value of our reporting unit using only the market approach. Applying this approach, we utilized company comparisons and analyst reports within the telecommunications industry which supported a range of fair values derived from annualized revenue and Earnings Before Interest, Tax, Depreciation and Amortization ("EBITDA") multiples between 1.5x and 3.5x and 4.8x and 8.4x, respectively. We selected a revenue multiple within and an EBITDA multiple below these comparable market multiples. Based on our assessment performed, we concluded that the estimated fair value of our reporting unit was less than their carrying value of equity at October 31, 2023. As a result, we recorded a non-cash, non-tax-deductible goodwill impairment charge of $2.4 billion on October 31, 2023. During the second quarter of 2023, the Company determined circumstances existed indicating it was more likely than not that the carrying value of our reporting unit exceeded its fair value. Given the continued erosion in Lumen's market capitalization, we determined our quantitative impairment analysis would estimate the fair value of our reporting unit using only the market approach. Applying this approach, we utilized company comparisons and analyst reports within the telecommunications industry which supported a range of fair values derived from annualized revenue and EBITDA multiples between 1.5x and 4.3x and 4.6x and 10.5x, respectively. We selected a revenue multiple within and an EBITDA multiple below these comparable market multiples. Based on our assessment performed, the estimated fair value of our equity exceeded our carrying value of equity by approximately 11% at June 30, 2023. We concluded that goodwill was not impaired as of June 30, 2023. The market approach that we used incorporated estimates and assumptions related to the forecasted results for the remainder of the year, including revenues, expenses, and the achievement of certain strategic initiatives. In developing the market multiples, we considered observed trends of our industry participants. Our assessment included many factors that required significant judgment. Alternative interpretations of these factors could have resulted in different conclusions. 2022 and 2021 Goodwill Impairment Analysis At October 31, 2022 and 2021, we estimated the fair value of equity by considering both a market approach and a discounted cash flow method. The market approach method includes the use of comparable multiples of publicly traded companies whose services are comparable to ours. The discounted cash flow method is based on the present value of projected cash flows and a terminal value, equal to the present value of all normalized cash flows after the projection period. Based on our assessment performed, the estimated fair value of our equity exceeded our carrying value of equity by approximately 24% and 42% at October 31, 2022 and 2021, respectively. We concluded that goodwill was not impaired as of October 31, 2022 and 2021. Our fair value estimates for evaluating goodwill incorporated significant judgments and assumptions including forecast revenues and expenses, cost of capital, and control premiums. In developing market multiples, we also considered observed trends of our industry participants and other qualitative factors that required significant judgment. Alternative estimates, judgments, and interpretations of these factors could have resulted in different conclusions regarding the need for an impairment charge. The following table shows the rollforward of goodwill from December 31, 2021 through December 31, 2023:
| (Dollars in millions)
As of December 31, 2021 | $ | 9,360 |
As of December 31, 2022 | 9,360 |
Impairment | (2,405) |
As of December 31, 2023(1) | $ | 6,955 |
______________________________________________________________________ (1)Goodwill at December 31, 2023 is net of accumulated impairment losses of $2.4 billion. We annually review the estimated lives and methods used to amortize our other intangible assets. The actual amounts of amortization expense may differ materially from our estimates, depending on the results of our annual reviews. As of December 31, 2023, the weighted average remaining useful life was 3 years for capitalized software. Total amortization expense for intangible assets for the years ended December 31, 2023, 2022 and 2021 was $67 million, $79 million and $176 million, respectively. We estimate that total amortization expense for intangible assets for the years ending December 31, 2024 through 2028 will be as follows:
| (Dollars in millions)
Year ending December 31, |
2024 | $ | 44 |
2025 | 16 |
2026 | 10 |
2027 | 7 |
2028 | 5 |

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