But what will this mean for consumers - particularly those who are suffering from slow broadband - or none at all?
Rival telecoms companies have long argued that Openreach - the firm providing most of the UK's broadband infrastructure - should not be part of the same group as BT, which has a third of the country's broadband market.
The likes of Sky and TalkTalk say this structure has been bad for competition and consumers.
Ofcom agreed - as did the Department for Culture, Media and Sport. To avoid a protracted legal battle, BT has now fallen into line.
The jury is still out. BT will still control Openreach's budget, even though the newly separated company will have its own boss and decide how to spend its cash.
Really fast broadband requires running fibre optic cable into every home, which is very expensive. As a result, most UK broadband connections still rely on the elderly copper wires used for telephone calls.
Andrew Ferguson, of the news website ThinkBroadband, said it is unclear whether separating BT and Openreach will deliver this faster option.
Most observers agree that the split alone will not solve the UK's broadband problems.
Slow and non-existent broadband is still an issue in some rural areas and Openreach has been criticised for its failure to address the issue. However, very few other operators appear willing to fix the problem, which is expensive and technically challenging.
You have a broadband fault but it is taking weeks to fix. Sound familiar?
Critics say Openreach just failed to provide adequate levels of customer service because complaints come through a customer's internet service provider, giving it no incentive to undertake repairs more quickly.
Gavin Patterson, BT chief executive, admitted on Friday that Openreach's service has "not been where it needed to be" and said the separation would improve the situation.
It remains to be seen how long that will take to deliver - and to remove the BT logo from thousands of BT white vans.

Following the veteran entertainer's death last week, they have shared some of their best photos.
The friends met at university in Brighton and started "doing a Brucie" when posing for photos on nights out. Their homage to the great man went global when they travelled to the Roskilde music festival in Denmark after graduating in 2007.
"That trip was where the whole idea of taking these photos in various locations around the world came from," says Joseph Bradfield, 31.
"We did it a lot through our university days when we were out drinking, but that trip around Europe after graduating, we pretty much took one everywhere we went.
"It became a bit of a thing whenever there was a photo op. It would be, 'Look at the camera, smile, now pull a Bruce.' It just snowballed."
Perhaps the best "thinker" tribute was staged when one of the group, Jeremy Dresner, got married in Canada.
The friends often attract confused looks when striking the pose in countries where Sir Bruce wasn't a big star, Joseph says.
"You do it in the UK and people kind of know what you're doing. They still don't really know why you're doing it but there's at least that glimmer of recognition.
"But whenever we've done it overseas there's always puzzlement on the locals' faces."
Joseph says the friends - about 10 in all - admired Sir Bruce's approach to his career as well as being fans of his TV shows.
"There's that quote where he said, 'I don't see myself as a singer or a dancer or an actor. I'm an entertainer,'" Joseph explains.
"That really resonated with us, that approach to life, that you don't have to be the best at any one particular discipline but it's all about the impact you have on other people and entertaining other people."
The friends decided to gather the photos after the news of Sir Bruce's death broke.
"It's been quite an operation of digging through Facebook photos to find everything," Joseph says.
"The second the news happened last week my phone lit up with the Whatsapp group we're all part of saying, we really have to do something with this trove of photos."
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Ofcom, the telecoms regulator, said on Friday that BT had agreed to "legally separate" Openreach - the division that owns and operates the UK's broadband network.
[NEXT_CONCEPT]
Among Sir Bruce Forsyth's biggest fans are a group of friends who worshipped him so much that they have recreated his famous "thinker" pose wherever they have been around the world for the past decade.