The merger between Vodafone and Three has been approved, creating the UK’s biggest mobile network with 27 million customers.

The £16.5bn deal can go-ahead if both companies agree to invest billions in the country’s 5G network and also cap certain mobile tariffs and data for at least three years to protect new and existing customers from “short-term” price rises.

The Competition and Markets Authority (CMA) had previously raised concerns that the Vodafone and Three merger could drive up people’s bills.

But Stuart McIntosh, who led the watchdog’s probe into the deal, said it would “likely to boost competition” in the mobile sector and should be allowed to proceed – but only if the firms agree to the measures.

The rising cost of mobile phone contracts and other digital services has been an issue of concern for regulators as has the slow pace of the UK’s 5G roll out.

Vodafone’s chief executive Margherita Della Valle told the BBC’s Today programme its £11bn investment programme would be “entirely self-funded” by the company.

“Self-funded means no extra costs from public funding and no extra cost for our customers,” she said.

It is the latest example of consolidation in the UK mobile market.

In 2010, Orange and T-Mobile emerged to create EE, which itself was taken over by BT in 2016.

Then, in 2021, the CMA approved a £31bn merger of Virgin Media and O2.

Those deals were followed by job cuts. EE axed 1,200 roles in the months following the merger of Orange and T-Mobile, then an additional 550 jobs the following year.

Vodafone and Three have previously claimed their merger will create thousands of new jobs.

But the union Unite has warned in the past that the deal could add an extra £300 a year to customers’ bills, and lead to “up to 1,600 jobs” being lost.