* Earnings decline 5 pct
* Vodacom takes 1 bln rand hit from MTR
* Shares down nearly 6 pct (Adds details, analyst)
By Helen Nyambura-Mwaura
JOHANNESBURG, Nov 10 (Reuters) - Shares of South Africanmobile phone operator Vodacom fell nearly 6 percent onMonday after it posted a surprise decline in first-half earningsand warned earnings growth would be slow over the next threeyears.
South African telecom companies are battling to return thekind of double-digit margins posted over the last decade ascompeting firms cut voice and data costs to gain market share.
Vodacom, South Africa's operator with the most users,lowered its medium-term outlook for earnings before interest,tax, depreciation and amortisation to mid-single digits fromprevious expansion forecasts of mid- to high-single digits.
Rival Telkom SA has warned its earnings for thefirst six months would fall by up to 70 percent.
"It's not a Vodacom specific story," said Farai Mapfinya,head of equities and portfolio manager at JM Busha AssetManagers.
"The industry as a whole is actually going into a lowreturns environment. You are not likely to see the high marginsthat we have seen in the past and not likely to see highdouble-digit growth in terms of earnings for the foreseeablefuture."
The local unit of Vodafone Plc said its servicerevenue -- which excludes income from non-core business such asmobile phone sales -- took a 1 billion rand ($89 million) hitafter the sector's regulator halved termination rates, theamount operators charge one another to connect calls, this year.
Vodacom said diluted headline earnings per share, SouthAfrica's benchmark profit measure, fell 5 percent to 415 centsper share in the six months to end-September.
The operator that offers services across five Africancountries including Tanzania, the Democratic Republic of Congoand Mozambique said revenue from those countries grew 13percent, contributing a quarter of the group's service revenue.
Vodacom is the dominant operator in South Africa althoughdwarfed by rival MTN across the continent.
($1 = 11.1754 South African rand) (Editing by Joe Brock and David Evans)
Vodafone (VOD)