ESAT Digifone insisted last night that it is still on target to launch its mobile phone system early in the New Year.

However, it may have to apply for planning permission to use Garda masts, a process which could result in a considerable delay in launching the system.

Esat wants to put its mobile phone antennae on Garda radio masts in a deal which is said to be worth around £3 million per annum to the Garda. When the licence was awarded last May, one of the conditions imposed by the Department of Transport, Energy and Communications, was trial Esat had to achieve 80 per cent coverage within nine months. This means it must launch by the middle of February.

The Minister of Stale at the Department of Justice, Mr Austin Currie, told the Dail earlier this week that ESAT would have to comply with all planning legislation. Replying to a Dail question on behalf of the Minister for Justice, Mrs Owen, he said any "exemptions or special, arrangements which apply to Garda stations or facilities in terms of planning requirements could not be availed of by Esat or any other commercial operators".

Esat has previously indicated that planning problems, regarding locating its masts, was one of the factors which was slowing its progress. When news of the negotiations between Esat and the Garda broke, it was speculated that an added attraction of the deal would be that Esat would not have to engage in tortuous planning processes.

However, it was stressed then that planning requirements would have to be complied with.

The deal between the Garda and Esat has still not been concluded band it was unclear last night how soon it will happen. A spokeswoman for Esat said the company would comply with all planning requirements and would launch "early in the New Year."