IS in Mosul, Iraq
IS in Mosul, IraqReuters

The Islamic State (ISIS) terrorist group blocked all mobile phone networks in the largest Iraqi city they control, Mosul, accusing informants in the city of tipping off coalition forces to their whereabouts, residents told The Associated Press (AP) on Thursday.

Residents described a scene of "chaos" and "paralysis" in the city, a day after the terrorists announced their decision on their Mosul-based radio network.

Businesses were at a standstill as residents tried to understand what was happening, residents said. Some are still able to access the Internet, which operates under a different network.

All residents spoke on condition of anonymity for fear of reprisal.

ISIS seized Mosul in June during its lightning advance across northern Iraq, after the Iraqi military virtually crumbled when confronted by the group. The U.S. began launching airstrikes on August 8 and has conducted at least 22 strikes around the city of Mosul alone.

The city has come to represent the expanding power and influence of the extremist group, which was born in Iraq but spread to Syria, where it grew exponentially in the chaos of the country's civil war.

Abu Bakr al-Baghdadi, the group's reclusive leader, made his first video appearance in Mosul in July to announce his vision for a self-styled caliphate, a form of Islamic state.

Baghdad-based political analyst Hadi Jalo told AP that this move by ISIS is a clear sign that the terrorists are losing confidence after a string of recent victories by Iraqi troops, backed by Shiite and Kurdish militiamen.

"Even the people in Mosul, who hate the Shiite-led government, are becoming less sympathetic with the militants — whose main victims are Sunnis, not Shiites, nowadays," said Jalo.

An official in one of the Iraqi mobile phone operators said his company is investigating the issue, but declined to give further details.