Only hours before PNG's telecommunications regulatory body, Pangtel, advised Digicel it was withdrawing the company's interim spectrum licence because it was in conflict with the latest government information and technology policy.
However, before its official launch, company officials took out a court injunction to stop Pangtel from revoking its licence.
The company, which has taken a low media profile before its official launch, told a press conference on Wednesday the Pangtel action was illegal and it would continue to rollout its mobile network.
Although Digicel only began to take on subscribers last Friday, executives said that by Tuesday it had 20,000 customers. Many sales outlets continued to attract queues on Wednesday even after the PNG media had widely reported the Pangtel action.
Digicel appears to be caught in a web of circumstance following a National Government decision to ask its competition body, the International Consumer and Competition Commission or ICCC, to carry out a bidding process to award two mobile telephone licences.
Digicel, one of the two successful companies, has been building its network and hiring staff despite opposition from the government monopoly, Telikom PNG.
Following the recent passage of a new telecommunications policy under which Telikom is to be split into two bodies, one of which will own the nation's telecommunications infrastructure backbone, the government instructed the mobile licences be withdrawn.
Confusion continues to reign about what might eventuate.
The ICCC Chief Executive Thomas also expressed surprise on Wednesday at the Pangtel announcement.
"The Radio Spectrum Act requires Pangtel to consult with ICCC before revoking the spectrum licence," he said. "We are seeking clarification from Pangtel about the purported revocation of Digicel's spectrum licence."
Digicel director, Seamus Lynch, accused Pangtel of carrying out an "illegal" act. "Pangtel has no legal basis to return the cheques (payment for the licences) and we do not understand the reasons behind this move."
"I met with the Prime Minister Grand Chief Sir Michael Somare in early March 2007, and he personally gave us the reassurance that our investment and license to operate in this country was protected."
"Any rumour with Digicel going out of business is absolute rubbish," he said, adding that his company had the full support of the ICCC and the Chamber of Commerce. He confirmed it was business as usual for Digicel.
Digicel has meanwhile disclosed it has already invested more than K480 million for its rollout out of an investment of K1.2 billion.
He said lack of interconnectivity with Telikom PNG's long established network of landline telephones and mobile phones would not affect customers because increasing numbers of people were signing up with Digicel.
Digicel Chairman Denis O'Brien told Tuesday night's launch that PNG was the 24th country in which Digicel was operating, and even if Telikom PNG stopped his company from connecting with the network, "there is a snowball coming down the mountain".
The West Indian company is urging potential customers to bring in their Telikom PNG B-Mobile SIM card to swap for a free Digicel SIM card and K20 (about A$8) worth of free credits.
It is unlikely the public and corporate sector have heard the last of the Digicel-Telikom PNG drama.