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Vodafone has pulled the sale of its paging business to Capita and will shut it down after the competition watchdog threatened to investigate the deal.

Vodafone and Capita run the UK's last two paging businesses and agreed the sale in February.

But the Competition and Markets Authority said it was concerned customers may now face price rises.

Vodafone said was 'disappointed' by the CMA's decision and it made more economic sense to close the business.

A spokesman for Vodafone said: "This seems to be a surprising decision considering that this market has been contracting for some time and no other country in Europe has more than one wide area paging network.

"Due to the expense involved with a prolonged investigation, Vodafone will not pursue the transaction and has made the decision to close down this business, which is based on ageing, standalone technology no longer supported by network vendors."

He added that Vodafone could do "its utmost to minimise the impact on the 1,000 or so customers still using the service".

A spokesman for Capita declined to comment on whether Vodafone's remaining customers will end up transferring to its PageOne business.

He said: "We are disappointed that the acquisition has not been approved at phase one by the Competition and Markets Authority."

Pagers, a decades-old technology, are still used by many people such as those working in the emergency services because of their reliability, coverage and battery life. They are used by the NHS and the Army as well as lifeboat services.

The technology had its heyday in the 1990s and early 2000s and was sometimes referenced in rap music such as Jay-Z's single "I Just Wanna Love U (Give It 2 Me)" where he boasted about his new Motorola two-way pager.

As Vodafone and Capita are the only suppliers of wide-area paging services in the UK, the CMA said it believed the deal could lead to higher prices as well as reduced quality of coverage for customers.

In a statement, the CMA had said the two companies must find "acceptable ways of addressing competition concerns" to avoid an investigation.

"Capita and Vodafone both supply wide-area paging services to customers, including emergency services and hospitals," the regulator says.