Market observers say Denis O'Brien's flagship is being stalked by a more powerful rival commanded by the world's richest man.

The scene is set for an intriguing battle. Carlos Slim Helu, boss of South American telecoms giant America Movil, offered a reported $70m for a controlling stake in Jamaican mobile operator MiPhone last month. The investment is a stepping stone for further Caribbean expansion for Slim . . . reckoned to be worth around $68bn, recently topping Bill Gates . . . who is said to be irked by the Irish upstart O'Brien privateering in the Mexican magnate's own backyard.

O'Brien has been swashbuckling around the Caribbean for the past six years, hoovering up mobile licences as markets there were liberalised, and governments invited private mobile operators to compete with former state-owned telecommunications monopolies. The company now has a presence in 22 markets in the Caribbean.

Digicel expanded rapidly by aggressively marketing lower prices and building brand new mobile network infrastructure, catching national incumbents and London-based regional player Cable & Wireless napping.

O'Brien has reportedly invested $1.9bn in the region, including tens of millions in highly visible sporting sponsorships such as the West Indies cricket team.

Slim, chairman of both Telefonos de Mexico and the fifth-largest wireless telco in the world, America Movil, is bent on establishing telecoms brands across Latin America. His companies currently provide mobile services to an estimated 140 million subscribers.

"This more than a business story, it is a kind of struggle of personalities in the industry, " said Erasmo Rojas, regional director of 3G Americas, the wireless industry association.

Slim is now looking to expand into the Caribbean as part of a monstrous tussle for Latin American market dominance against Spanish telco Telefonica, according to Rojas.

Telefonica owns O2 in Ireland and is in the process of acquiring South American mobile operations through its purchase of Telecom Italia.

O'Brien's five million mobile customers would make a good start.

"America Movil has got a lot of excess cash at the moment and is looking for a good opportunity to buy so it doesn't have to return all this cash to its shareholders, " said Tammy Parker, head North American analyst at consultancy Informa.

"Digicel would be a model acquisition for America Movil, " said Parker. "It's got a great brand, its upgradeable networks are now built, it has a regional footprint and is a nice going concern."

'"I'm not aware of any obvious signals regarding negotiations. But Digicel is attractive and America Movil is flush with cash, so anything is possible, " she said Slim's move into Jamaica, his first operation in a nonSpanish speaking territory, is only the beginning of a new strategy, according to analysts. The Anglophone island is the third Caribbean market for Movil, following moves into Puerto Rico and the Dominican Republic. Acquisitions may be next.

Other analysts suggested that if America Movil and Digicel don't wind up collaborating, things could get rough for O'Brien. "Digicel's easy ride is over, " Jose Otero, an analyst at Signals Telecom Consulting, recently told the Economist.

"This is the first time they are going to face someone who is used to competing in the global market with better financial strength and government relations."

Digicel has stressed the company is not for sale, and there is potential for organic growth in low penetration markets such as Haiti, "but if someone strode up to their door and offered outright. . . things might be different, " suggested Parker.

Sources in Dublin suggest O'Brien was considering a flotation for Digicel, but Slim's move into the Caribbean has given him pause for thought and he is mulling other options.

If O'Brien is considering a sale he is well placed to do so. The Corkman gained 100% control of the company earlier this year after raising $1.4bn from a bond issue, allowing him to purchase the 22% owned between former Esat chief executive Leslie Buckley, Seamus Lynch, Lucy Gaffney, accountant Greg Sparks and former government press advisor PJ Mara. O'Brien had previously bought out accountant Ossie Kilkenny and financier Paul Connolly and is reckoned to have personally netted more than $800m from the bond issue.

"His timing was very good, " according to one industry insider with operations in the Caribbean, "before the threat of serious competition emerged he managed to take a huge slug of money out of the company and has reduced his personal risk in the business which now has substantial interest payments to make. In effect he already has sold up."

Rojas of 3G Americas, which represents 2.9bn mobile subscriber, sees purely mobile Digicel as a more likely acquisition target for America Movil than Cable & Wireless which has only 1.5m mobile subscribers and an ageing landline business.

"Consolidation is going on all over the region. . . and companies need economies of scale to operate across lots of islands, " he said.

One source close to Digicel Caribbean's senior management said it wouldn't surprise her if O'Brien did sell up, as he enjoys a challenge and is becoming increasingly engaged in the running of Digicel Pacific, the mobile operator he established last year based in Samoa. "That's where he'll get the first mover advantage again . . . which he enjoys, " she said.

The 49-year-old said he was "passionate" about bringing wireless technologies to the pan-Pacific region when he established operations in Samoa last year, but Digicel's passage across the world's largest ocean has not been plain sailing.

The government of Papua New Guinea last week intensified its efforts to remove a mobile licence previously awarded to the operator.

O'Brien flew to the capital Port Moresby last weekend to rescue his $17m licence, and local media claimed he told government ministers that the European Union and World Bank were watching events there closely.

In a statement, Digicel said the revocation of its licence would knock Papua New Guinea's international reputation.

Competitors in both the Caribbean and Pacific islands have complained about Digicel's knack for getting its way with local governments. The Economist noted that Haiti's regulator ruled that Digicel had violated international standards when it counted Haiti as part of Jamaica to offer cheap roaming. But the regulator was overruled by the government. Digicel shrugs off the claims as carping from jealous rivals.

"We know of no incumbent any where in the world that has collapsed due to the liberalisation of the mobile telecommunications market and the entrance of another player into the market place, " said a Digicel spokeswoman, who added that the company endeavors to build positive and proper relationships with all governments.

O'Brien has said he was used to this type of criticism, which he suspects emanates from jealous rivals in the region. If he's faced with a choice between selling to Slim or fighting it out, like a good sea captain O'Brien can be counted on to choose the lesser of two evils.