With speculation that Telkom Media is on the verge of closing, On Digital Media (ODM) could be the only company left to break the monopoly held by MutliChoice.
ODM said when it received its subscription broadcasting licence a year ago that it needed R1 billion to launch its service.
Chief executive Vino Govender said yesterday: "Securing full funding has been a major hurdle for the newly licensed pay TV operators and the current economic climate has added to their woes.
"ODM has, however, managed to raise sufficient funds to fulfil its business case."
The company is on track to launch in the last quarter of this year. It aims to provide up to 60 TV channels.
Telkom Media, On Digital Media, e.tv sister company e.sat and Walking on Water were awarded licences in 2007.
At the time, e.sat warned that the market was not big enough for more than two operators. It opted instead to provide content to MultiChoice, which had more than 1.6 million local customers and revenues of R5 billion at the end of September.
The attention moved to Telkom Media, which, like e.sat, was seen as a strong competitor to MultiChoice.
But this week it emerged that after a year of trying to secure new shareholders to invest the more than R5 billion Telkom Media needed for the new operation, Telkom, which owns 66 percent of the company, might close the unit before it starts operating.
There were suggestions that Telkom Media and ODM should merge to provide an alternative to MultiChoice.
Govender said ODM was "open to discussions".
Rajay Ambekar, a portfolio manager at Africa Analysis, said that if the link happened, it would improve the firms' positioning and reduce funding and operational risk, but "I don't see it becoming a serious threat."
"MultiChoice is in a strong position in the market and it will be difficult for someone to compete with it," he said.
Ambekar said the new competitor might look into providing niche services, such as IPTV (TV broadcasting over the internet). But until broadband picked up and prices came down, "we will probably continue to see the licensed pay TV providers fall one by one".
David Moore, a media analyst at African Analysis, doubts Telkom Media will close down. "Telkom Media might exist under a different name, because its licence is lucrative. Maybe the losing bidders might buy it at a much reduced price."
Meanwhile, Solidarity said yesterday that Telkom had postponed plans to outsource some functions after talks with labour unions last week.