Mobile phone group Digicel has insisted that the chief executive of its Papua New Guinea subsidiary had a valid work permit as the company sought to defuse a row with the local authorities, writes John Collins.

It was reported last week that the Papua New Guinea labour secretary David Tibu had ordered Kevin O'Sullivan to leave the country because he did not have permission to work there.

It is the latest dispute between the Papua New Guinea government and Denis O'Brien's Digicel, which was the first alternative to state telco Telikom when it began operating in the Pacific island nation in July 2007.

A Digicel spokeswoman said yesterday that Mr O'Sullivan had travelled to Fiji over Christmas, but was now back in Papua New Guinea and working as normal.

"Digicel is currently working through this situation with the government of Papua New Guinea," she said.

It had also been reported that five other senior executives of the mobile phone operator had been asked to leave.

"In relation to the other senior executives in Digicel Papua New Guinea, the work permits of Digicel's expat employees in Papua New Guinea are valid," the company said in a statement.

Digicel has fallen foul of a change in government policy relating to technology and communications. It was forced to take out an injunction against regulator Pangtel last July when restrictions were imposed on the roll- out of its network.

Papua New Guinea's communications minister has promised that an interconnector, which will allow Digicel and Telikom customers to speak to each other, will be in place by the end of the month.

Digicel invested about $150 million in the country up to November last, generating 300 jobs. It has plans to invest $340 million within the next three years. The government there has conceded that the Irish company's involvement in the local economy has added 0.7 per cent to gross domestic product.

Digicel operates in 26 markets in the Caribbean and Pacific regions. The group is now wholly controlled by Mr O'Brien.