South Africa's telecoms operator Vodacom's earnings drop

South Africa's biggest telecoms operator Vodacom reported a 4.2% drop in half-year earnings on Monday, hit by the cost of starting operations in Ethiopia and higher interest rates.

The company, which is majority owned by Britain's Vodafone , co-launched Safaricom Ethiopia last year, betting that the populous nation will power growth after about five years of investment.

Group CEO Shameel Joosub said Safaricom Ethiopia has already reached 4.1 million customers and more recently it launched its mobile financial services business M-Pesa there.

Headline earnings per share (HEPS), a profit measure, fell to 438 cents in the six months ended Sept. 30, from 457 cents a year earlier.

Group service revenue grew 42.2% to 59.3 billion rand ($3.16 billion), thanks to the acquisition of Vodafone Egypt and rand depreciation against its basket of international currencies.

Excluding the contribution of Vodafone Egypt, group service revenue growth was 7.9% or 4.1% on a normalised basis, supported by a resilient performance in South Africa, the operator said.