The goodwill was allocated to the fixed line segment. Accounting rule (inaudible) 36 require the company management to undertake goodwill impairment reviews at least once a year or more frequently if events or changes in circumstances indicate that the carrying amount may not be revocable. It is also necessary to review for impairment of any non-financial assets with finance [slides] whenever eventual changes in the circumstances indicate that the carrying amount may not be recoverable.
In the fourth quarter of 2011, changes in the fixed line market occurred and were considered by the management as regular events. We felt that the events were sufficiently significant to require the undertaking of an impairment test for the assets of the fixed line segment. Until December 2011, international connectivity of internet traffic from Israel was provided by the sole monopoly provider Med-1. Med (inaudible). During December 2011, Bezeq International Ltd completed the installation of an underwater cable between Israel and Italy and began commercial use soon after. In addition the company Tamares Telecom Limited was in the final stages of laying another underwater cable, which was then completed in January 2012. This U cable offers yet another communication channels between Israel and Western Europe.
The additional capacity from this cable significantly increased the level of competition in the market for international connectivity services. And as expected, this led to a sharp decline in prices for international connectivity services during the fourth quarter of 2011.
Furthermore, it was expected at the time with increased competition in retail ISD market would lead to a decrease in prices and market share indicating the need to perform an impairment test for certain assets of the fixed line segment.Read the rest of this transcript for free on seekingalpha.com
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts