By Ron Derby

JOHANNESBURG (Reuters) - South Africa's pay-TV market, which has been dominated by media group Naspers, is set for a shake up after the award of four new broadcast licences on Wednesday.

South Africa's communications authority granted fixed-line operator Telkom's media unit, Telkom Media, and leisure and media group Hosken Consolidated Investments licences along with two smaller operators -- On Digital Media and Walking on Water.

Entry of new operators is expected to stimulate the market, with more money being pushed to marketing pay-TV services, portfolio manager Khulekani Dlamini at Renaissance Specialist Fund Managers said.

Chief Executive Officer Nolo Letele of Naspers' local pay-TV operation MultiChoice SA said the unit had been gearing up for competition.

"We will have to fight that much harder for the disposable rand in people's pockets," Letele said after the announcement of the winning bidders.

Telkom applied for the licence to run a pay-TV service as it tries to diversify its revenues and challenge Naspers' decade-old pay-TV monopoly.

Telkom Media -- which has funding of over 7.5 billion rand over eight years -- has said it will offer cheaper packages in attempts at attracting subscribers, starting at approximately at 100 rand a month.

MultiChoice packages currently run from 139 rand to 494 rand per month.

CHEAPER PACKAGES

Most of the budding pay-TV operators put forward a much cheaper package as key to the success of their ventures.

"We expect to be in the market within the next 12-16 months," said Connie Molusi, chairman of Telkom Media and former Johnnic Communications chief executive.

Molusi said operators that offer the best composition would win the day. Telkom Media is also looking to move into 12 countries in the continent.

Letele said MultiChoice -- which has launched cheaper packages in anticipation of increased competition -- would not enter into a price war, although he said the operator would possibly relaunch its 18-rand a month offering.

"No price wars, we believe to do that you are destroying your business," he said.

MultiChoice SA -- which has about 1.4 million subscribers -- contributes approximately 76 percent to Naspers revenue.

Letele said the market had the potential to reach 2.5-3 million subscribers.

HCI, which controls casino and hotel company Johnnic Holdings, was not immediately available for comment. It also has a majority stake in commercial TV broadcaster eTV.

On Digital -- which has partnered with Paris- and Luxembourg-listed European satellite giant SES ASTRA -- has committed 1.2 billion rand to rolling out its pay-TV operations.

"Most of the initial funding will go towards acquiring content, technology and personnel," said Laurent Petit, representative of Astra.

At 1135 GMT, Naspers was trading 0.33 percent firmer at 175.58 rand, with Telkom 1.22 percent lower at 183.73 rand, compared to a 0.51 percent weaker JSE blue chip top-40 index. HCI was unchanged.