DISH Valens Credit Analysis – CDS 450bps, Base Case iCDS 113bps, Negative Case iCDS 174bps, 2024 5.875% Bond YTW of 5.674%, iYTW of 1.414%, Ba3 Rating from Moody’s, XO (equivalent to Baa3) Rating from Valens, High Refinancing Need

• Credit markets are grossly overstating credit risk, with a CDS of 450bps and a bond YTW of 5.674% relative to an Intrinsic CDS of 113bps and an Intrinsic YTW of 1.414%. Furthermore, Moody’s is overstating DISH’s fundamental credit risk, with its Ba3 rating three notches lower than Valens’ XO (Baa3) rating
• Incentives Dictate Behavior™ analysis highlights DISH’s compensation framework should drive management to improve all three value drivers, which should lead to Uniform ROA expansion, and greater cash flows available for servicing obligations. Furthermore, management members have no change-in-control compensation, indicating that they are not well-incentivized to accept a buyout or pursue a sale of the company, reducing event risk
• Earnings Call Forensics™ of the firm’s Q1 2020 earnings call (5/7) highlights that management is confident their employees have been working a lot of extra hours to take care of their frontline customers and the DISH community. However, they may lack confidence in their ability to compete and build out a telecommunications network and finalize the Boost deal, and they may be concerned about prepaid business model limitations. Furthermore, they may be concerned about competition from streaming platforms and the sustainability of favorable broadcasting negotiation terms