Customers are being promised a host of new services and will not have to change Sim cards, Virgin Media said.

The cable group's current contract with BT, which owns the EE network, expires in 2021, although Virgin will launch 5G services with Vodafone before then.

The contract is reportedly worth about £200m to BT, whose shares fell 4.7%.

Virgin Media chief executive Lutz Schuler said: "This agreement with Vodafone will bring a host of fantastic benefits and experiences to our customers, including 5G services in the near future.

"Twenty years ago, Virgin Mobile became the world's first virtual operator and this new agreement builds on that heritage.

"It will open up a whole new world of opportunity for Virgin Media as we focus on becoming the most recommended brand for customers and bring our mobile and broadband connectivity closer together in one package for one price.

"We want our customers to have a limitless experience - it's now the right time to take a leap forward with Vodafone to grow further and faster."

'Coup'

Meanwhile, Vodafone UK chief executive Nick Jeffery said the deal combines "two great British brands... combining our strong heritage in innovation".

Analyst Paolo Pescatore, from PP Foresight, said: "For Vodafone, this is a great coup as it continues to turn around its fortunes in the highly competitive UK market."

Virgin Media is owned by US telecoms giant Liberty Global, which is also rumoured to be in talks with Sky to invest in a full-fibre network.

Wednesday's Vodafone deal, along with any tie-up between Liberty and Sky, raises the competitive pressure on BT, which is investing heavily in upgrading its own network.

A BT spokesperson said: "The successful relationship between BT and Virgin Media spans nearly 20 years and they remain a highly valued customer.

"Our EE network is consistently ranked number one for speed and coverage in independent benchmarking tests, providing our EE customers... with the UK's best mobile experience."