Digicel, the Caribbean mobile phone operator set up by the entrepreneur Mr Denis O'Brien, said yesterday it would take legal action against Cable & Wireless.

The Irish firm, which already has a successful operation in Jamaica with 700,000 subscribers, has accused Cable & Wireless of breaching an interconnect agreement in St Lucia.

In a statement, Mr O'Brien said there was clear evidence that Cable & Wireless was blocking certain international calls to Digicel customers on the small Caribbean island of St Lucia.

Cable & Wireless is restricting calls from countries where it still maintains a monopoly, such as Grenada, Barbados and the Cayman, believes Digicel.

It has also accused Cable & Wireless of blocking calls from international carriers that use Cable & Wireless's network to terminate calls.

"It's obvious that Cable & Wireless are still attempting to stop competition," said Mr O'Brien, who sold Esat to British Telecom for $2.5 billion (€2.3 billion) in 2000. "The interconnection agreement is a binding legal agreement, which was agreed after extensive negotiations between the parties and the intervention of the prime minister," Mr O'Brien said

"Furthermore the agreement was formally approved by the National Telecommunications Regulatory Commission in St. Lucia," he added.

Cable & Wireless is the incumbent operator in the Caribbean but is facing growing competition from Digicel which last month launched in St Lucia, St Vincent and the Grenadines.

A spokesman for Cable & Wireless in St Lucia was not available for comment yesterday.

The island of St Lucia has a population of 153,000 people and is located in the windward group of islands in the Caribbean Sea.