BT agrees to legal separation of Openreach in deal with regulator

The telecoms regulator says BT has agreed to a "legal separation" of its Openreach division, in a move aimed at addressing competition concerns.

Ofcom said the deal - which stops short of a full split - meant the company's infrastructure unit will become a "distinct, legally separate company with its own board, within the BT Group".

It goes some way to addressing the demands of BT's rivals, including Sky PLC - the owner of Sky News - which claim Openreach favours BT's own retail business and harms their customers' interests as a result.

They had called for a full split on competition grounds.

Openreach builds and maintains the tens of millions of copper and fibre lines that run from telephone exchanges to homes and businesses across the UK.

BT and its competitors rely on these to service their business and domestic customers.

Ofcom, which had demanded the separation in November, said while Openreach would remain part of the BT Group it would have a separate board and brand identity from BT, though its chief executive and chairman would be accountable to BT's boss in some areas.

It expected 32,000 staff to formally transfer to Openreach later this year once consultation processes and pension arrangements had been completed.

The head of Ofcom, Sharon White, warned the watchdog would "carefully monitor" performance once the separation took place.