LONDON: Britain’s competition regulator on Friday announced a formal investigation into Vodafone’s plan to merge its British mobile phone operations with those of Three UK, owned by Hong Kong-based CK Hutchison.

The proposed tie-up, announced in June last year, is aimed at creating Britain’s biggest mobile operator with 27 million customers and to accelerate rollout of faster 5G connectivity.

In a statement Friday, the Competition and Markets Authority said it “will assess how this tie-up between rival networks could impact competition”.

The planned transaction sees British giant Vodafone taking 51 percent of the combined group and CK Hutchison the rest.

The pair have a target value of £16.5 billion ($21 billion) for the new group, above the £15 billion they were worth when announced in June.

“This deal would bring together two of the major players in the UK telecommunications market, which is critical to millions of everyday customers, businesses and the wider economy,” added CMA chief executive Sarah Cardell.

The merger, if approved, will vault the combined operations above the country’s two largest mobile operators BT EE and Virgin Media O2 in terms of customer numbers.

Expansion of 5G across the UK has meanwhile been hampered by Britain’s ban on Chinese giant Huawei, a major supplier of equipment for mobile telephone networks.

“We strongly believe that the proposed merger of Vodafone and Three will significantly enhance competition by creating a combined business with more resources to invest in infrastructure,” Vodafone UK chief executive Ahmed Essam said in response to the CMA announcement.

Vodafone as a whole is led by chief executive Margherita Della Valle, who is carrying out significant changes at the group.