A deal that will create the country’s biggest mobile phone operator has been struck by Vodafone and the owner of Three UK, CK Hutchison.

The combined group, which will comprise only their respective UK operations, will be majority-owned by Vodafone with 51% of the equity.

The deal, if approved by regulators, will create a group with a combined 27 million mobile customers.

It would mean that BT-owned EE would lose its number-one position in the market by customer numbers. The merger would also see the combined group overtake O2.

But the Competition and Markets Authority is likely to be concerned that the proposed tie-up will lead to weaker competition.

The Reuters news agency reported in April that the companies could commit to network investments as part of their approach to satisfy any regulatory concerns.

Vodafone said that it expected the deal would close by the end of 2024.

Under the merger plans, which have taken longer to finalise than expected, no cash will change hands.

It will be completed through a debt adjustment instead, with £1.7bn to transferred to the new company by Three.

CK Hutchison, the Hong Kong-based group, had been exploring a sale of Three UK for some time.

The operation, which has nine million customers, was seen internally as sub-scale for a sector that carries huge capital investment requirements for developing network infrastructure.

The merger was initiated by Vodafone’s former chief executive Nick Read but he was effectively ousted at the end of last year amid widespread shareholder frustration over performance.

His successor, Margherita Della Valle, has signalled her intention to improve the firm’s competitiveness.

Vodafone revealed a plan last month to cut 11,000 jobs across its markets.