BT Group Plc (BT) said Friday that it has reached an agreement with U.K. regulators to spin off its Openreach business into a separate entity.

BT said that around 32,000 employees will transfer to Openreach once the separation is complete and that the new division will be a separate legal entity from BT, with its own board and chief executive officer. Openreach will also no longer carry any BT branding, the company said, after resolving a two-year dispute with Ofcom, Britain's telecoms watchdog.

Openreach, which focuses on network installation, has been at the center of debate between BT, the government and its commercial rivals amid accusations of under-investment and a lack of independence that has slowed the growth of faster broadband services in Britain - a key plank of Prime Minister Theresa May's digital industrial strategy.

BT shares rose nearly 4% in early London trading to change hands a six-week high of closed at 343 pence each and trimming their three-month loss to around 2.23%.

"I believe this agreement will serve the long-term interests of millions of UK households, businesses and service providers that rely on our infrastructure. It will also end a period of uncertainty for our people and support further investment in the UK's digital infrastructure," BT CEO Gavin Patterson said.

"This has been a long and challenging review where we have been balancing a number of competing interests. We have listened to criticism of our business and as a result are willing to make fundamental changes to the way Openreach will work in the future," he added.

The group has been under pressure to resolve its Openreach dispute after revealing in late January that its third quarter earnings plunged nearly 60% after taking a total £268 million charged linked to an accounting scandal at its Italian business.

The internal audit into BT's Italian unit was first announced in late October and the company had estimated costs associated with the investigation at around £145 million. However, the probe revealed that "the extent and complexity of inappropriate behaviour in the Italian business were far greater than previously identified" and costs could exceed £530 million ($644 million).

BT also expects that, owing to "pressures in the U.K. public sector and international corporate markets", it now expects flat revenue underlying revenue growth in the 2016/2017 fiscal year and adjusted EBIDTA of around £7.6 billion from a previous guidance of £7.9 billion.