British Telecom has agreed to a legal separation of its infrastructure division Openreach within the BT group, as part of a long-term settlement with British telecom regulator Ofcom, the telecom giant said March 10.

The deal is based on a number of voluntary commitments submitted by BT that were deemed by Ofcom to have satisfied its competition concerns. It provides for the creation of a new entity called Openreach Ltd., which will have its own branding without the BT logo.

Openreach will be able to manage and operate its assets and business, but such assets and trading will still be owned by BT. Further, the Openreach CEO will report to Openreach's chairman, who in turn will be accountable to BT's CEO.

Ofcom said separately March 10 that Openreach will need to conduct consultations regarding large-scale investments with customers such as Sky plc, TalkTalk Telecom Group PLC and Vodafone Group Plc. The entity's new operating model will be subject to continuous monitoring, with the separation process expected to begin in 2017.

Upon the deal's implementation, about 32,000 employees are expected to transfer to the new Openreach following consultations and setting of pension arrangements.

BT recently named three independent members of a newly formed board for Openreach.