UPDATE: Bank of America Downgrades China Mobile to Underperform

Bank of America lowers its rating on China Mobile

to Underperform on costly transition to 3G and 4G. Bank of America notes, "We believe mkt has factored in slower growth due to aggressive 3G competition from CT/CU and data substitution, but underestimated the losses from 2G data. Mobile data has consumed ~50% of GSM network capacity but only contributed to 8% of revenue; we estimate 2G data avg network cost per MB at ~RMB0.8, while avg revenue/MB is only 0.27 in FY11. We think 2G limited capacity and likely failure of offloading data to WLAN will force CM to aggressively subsidize users migrating to TD, which will push up selling & subsidy expenses in FY12-14." CHL closed at $54.24 a share on Thursday.