17. INTANGIBLE ASSETS
The intangible assets are split between assets with finite and indefinite lives.
The indefinite life intangible assets are summarized below.
| Orbital slots | Trade name | Intellectual property | Total
indefinite life intangibles | |||||||||||||
| Cost as at January 1, 2016 | $ | 610,611 | $ | 17,000 | $ | — | $ | 627,611 | ||||||||
| Additions | — | — | 13,161 | 13,161 | ||||||||||||
| Disposals/retirements | — | — | — | — | ||||||||||||
| Impact of foreign exchange | (1,214 | ) | — | — | (1,214 | ) | ||||||||||
| Cost as at December 31, 2016 and January 1, 2017 | 609,397 | 17,000 | 13,161 | 639,558 | ||||||||||||
| Additions | — | — | 12,577 | 12,577 | ||||||||||||
| Disposals/retirements | — | — | — | — | ||||||||||||
| Impact of foreign exchange | (2,654 | ) | — | — | (2,654 | ) | ||||||||||
| Cost as at December 31, 2017 | $ | 606,743 | $ | 17,000 | $ | 25,738 | $ | 649,481 | ||||||||
| Accumulated impairment as at January 1, 2016 | $ | (1,100 | ) | $ | — | $ | — | $ | (1,100 | ) | ||||||
| Impairment | — | — | — | — | ||||||||||||
| Accumulated impairment as at December 31, 2016 and January 1, 2017 | (1,100 | ) | — | — | (1,100 | ) | ||||||||||
| Impairment | — | — | — | — | ||||||||||||
| Accumulated impairment as at December 31, 2017 | $ | (1,100 | ) | $ | — | $ | — | $ | (1,100 | ) | ||||||
| Net carrying values | ||||||||||||||||
| As at December 31, 2016 | $ | 608,297 | $ | 17,000 | $ | 13,161 | $ | 638,458 | ||||||||
| As at December 31, 2017 | $ | 605,643 | $ | 17,000 | $ | 25,738 | $ | 648,381 | ||||||||
The finite life intangible assets are summarized below.
| Revenue backlog | Customer relationships | Customer contracts | Transponder rights | Concession rights | Other | Total finite life intangibles | ||||||||||||||||||||||
| Cost as at January 1, 2016 | $ | 245,989 | $ | 198,807 | $ | 23,142 | $ | 16,718 | $ | 1,154 | $ | 59 | $ | 485,869 | ||||||||||||||
| Additions | — | — | — | — | 31,479 | — | 31,479 | |||||||||||||||||||||
| Disposals/retirements | (9,974 | ) | — | — | — | — | — | (9,974 | ) | |||||||||||||||||||
| Impact of foreign exchange | (119 | ) | (155 | ) | — | — | 5,942 | — | 5,668 | |||||||||||||||||||
| Cost as at December 31, 2016 and January 1, 2017 | 235,896 | 198,652 | 23,142 | 16,718 | 38,575 | 59 | 513,042 | |||||||||||||||||||||
| Additions | — | — | — | — | 155 | — | 155 | |||||||||||||||||||||
| Disposals/retirements | — | (1 | ) | — | — | — | — | (1 | ) | |||||||||||||||||||
| Impact of foreign exchange | (261 | ) | (337 | ) | — | — | (3,140 | ) | — | (3,738 | ) | |||||||||||||||||
| Cost as at December 31, 2017 | $ | 235,635 | $ | 198,314 | $ | 23,142 | $ | 16,718 | $ | 35,590 | $ | 59 | $ | 509,458 | ||||||||||||||
| Accumulated amortization and impairment as at January 1, 2016 | $ | (190,346 | ) | $ | (97,422 | ) | $ | (3,615 | ) | $ | (9,093 | ) | $ | (480 | ) | $ | (27 | ) | $ | (300,983 | ) | |||||||
| Amortization | (10,647 | ) | (11,437 | ) | (2,720 | ) | (924 | ) | (1,959 | ) | (3 | ) | (27,690 | ) | ||||||||||||||
| Disposals/retirements | 9,974 | — | — | — | — | — | 9,974 | |||||||||||||||||||||
| Impact of foreign exchange | 102 | 9 | — | — | (400 | ) | — | (289 | ) | |||||||||||||||||||
| Accumulated amortization and impairment as at December 31, 2016 and January 1, 2017 | (190,917 | ) | (108,850 | ) | (6,335 | ) | (10,017 | ) | (2,839 | ) | (30 | ) | (318,988 | ) | ||||||||||||||
| Amortization | (8,749 | ) | (11,434 | ) | (2,890 | ) | (925 | ) | (2,329 | ) | (3 | ) | (26,330 | ) | ||||||||||||||
| Disposals/retirements | — | 1 | — | — | — | — | 1 | |||||||||||||||||||||
| Impact of foreign exchange | 243 | 141 | — | — | 89 | — | 473 | |||||||||||||||||||||
| Accumulated amortization and impairment as at December 31, 2017 | $ | (199,423 | ) | $ | (120,142 | ) | $ | (9,225 | ) | $ | (10,942 | ) | $ | (5,079 | ) | $ | (33 | ) | $ | (344,844 | ) | |||||||
| Net carrying values | ||||||||||||||||||||||||||||
| As at December 31, 2016 | $ | 44,979 | $ | 89,802 | $ | 16,807 | $ | 6,701 | $ | 35,736 | $ | 29 | $ | 194,054 | ||||||||||||||
| As at December 31, 2017 | $ | 36,212 | $ | 78,172 | $ | 13,917 | $ | 5,776 | $ | 30,511 | $ | 26 | $ | 164,614 | ||||||||||||||
The total combined indefinite and finite life intangible assets are summarized below.
| As at December 31, 2017 | As at December 31, 2016 | |||||||||||||||||||||||
| Cost | Accumulated amortization and impairment | Net carrying value | Cost | Accumulated amortization and impairment | Net carrying value | |||||||||||||||||||
| Indefinite life intangibles | $ | 649,481 | $ | (1,100 | ) | $ | 648,381 | $ | 639,558 | $ | (1,100 | ) | $ | 638,458 | ||||||||||
| Finite life intangibles | 509,458 | (344,844 | ) | 164,614 | 513,042 | (318,988 | ) | 194,054 | ||||||||||||||||
| Total intangibles | $ | 1,158,939 | $ | (345,944 | ) | $ | 812,995 | $ | 1,152,600 | $ | (320,088 | ) | $ | 832,512 | ||||||||||
The orbital slots represent a right to operate satellites in a given longitudinal coordinate in space, where geostationary orbit may be achieved. They are limited in availability and represent a scarce resource. Usage of orbital slots is licensed through the International Telecommunications Union. Satellite operators can generally expect, with a relatively high level of certainty, continued occupancy of an assigned orbital slot either during the operational life of an existing orbiting satellite or upon replacement by a new satellite once the operational life of the existing orbiting satellite is over. As a result of the expectancy right to maintain the once awarded orbital slots, an indefinite life is typically associated with orbital slots.
The Company’s trade name has a long and established history, a strong reputation and has been synonymous with quality and growth within the satellite industry. It has been assigned an indefinite life because of expected ongoing future use.
The Company’s intellectual property relates to development relating to its planned LEO constellation. It has been assigned an indefinite life because of anticipated ongoing future use.
The following are the remaining useful lives of the intangible assets:
| Years | ||||
| Revenue backlog | 2 to 7 | |||
| Customer relationships | 1 to 11 | |||
| Customer contracts | 3 to 9 | |||
| Transponder rights | 7 | |||
| Concession rights | 1 to 13 | |||
| Patent | 8 | |||
All of the Company’s intangible assets have been pledged as security as a requirement of the Company’s Senior Secured Credit Facilities as at December 31, 2017 and 2016 (Note 24).
Impairment
Finite life intangible assets are assessed for impairment at the Company’s CGU level. Indefinite life intangible assets are tested for impairment at the individual asset level. The annual impairment tests for these assets were performed in the fourth quarters of 2017, 2016 and 2015 in accordance with the policy described in Note 4.
No impairment loss was recognized in the years ended December 31, 2017, 2016 and 2015.
The recoverable amount, for indefinite life intangible assets valued using the income approach, which is equal to the fair value less costs of disposal, was calculated using the following assumptions:
| 2017 | 2016 | 2015 | ||||||||||
| Discount rate | 10.00 | % | 10.25% to 10.75% | 10.00 | % | |||||||
Some of the more sensitive assumptions used, including the forecasted cash flows and the discount rate, could have yielded different estimates of the recoverable amount. Actual operating results and the related cash flows of the Company could differ from the estimated operating results and related cash flows used in the impairment analysis, and had different estimates been used, it could have resulted in a different fair value.