Verizon to Book $5.8 Billion Goodwill Charge on Business Unit

By Colin Kellaher

Verizon Communications is taking a $5.8 billion goodwill-impairment charge related to its Verizon Business Group, which has been grappling with falling results.

Verizon on Wednesday said a recently completed five-year planning review of the unit resulted in lower financial projections compared to its prior five-year planning cycle, and that the revised projections were a key input into the unit's annual goodwill-impairment test.

The New York communications giant said the impairment test determined that the unit's fair value was less than its carrying value, resulting in the roughly $5.8 billion non-cash charge that will reduce the unit's year-end goodwill balance to $1.7 billion.

Companies report goodwill on their balance sheets when they buy a business for more than the value of its net assets. The acquiring business must measure the fair value of its reporting units annually. If that figure is less than the amount recorded on the books, the company reduces the value of the goodwill.

Verizon said its Verizon Business Group, which provides various wireless and wireline communications services and products for the enterprise and public sector, business markets and wholesale customers, has experienced secular declines, as well as continuing competitive and macroeconomic pressure, in wireline revenue across its customer groups.

The unit posted a 7.5% drop in revenue and a nearly 23% decline in segment operating income in the third quarter of 2023.

Write to Colin Kellaher at [e-mail]

(END) Dow Jones Newswires

January 17, 2024 08:47 ET (13:47 GMT)

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