Israel's delaying tactics over the launch of a new Palestinian mobile phone network could deal a substantial blow to the West Bank's economy, Tony Blair warned yesterday in his capacity as the international community's Middle East envoy.

Wataniya Mobile, based in Qatar, has been preparing for the launch of Palestine's second mobile telecoms company since 2007, with the second largest private investment in West Bank history, amounting to $700m.

But the company is frustrated by Israel's continuing refusal to release adequate frequencies and is threatening to close down its operation next month, seeking the return from the Palestinian Authority of its $140m licensing fee.