KKR has proposed a $12 billion proposal to take TIM private.
Under the fire of the top investor, CEO offers to give up powers.
MILAN, Nov 26 Reuters -- Telecom Italia faces another boardroom showdown when Luigi Gubitosi told them he was ready to quit as chief executive if that helped speed their decision over KKR's takeover proposal.
The board of Telecom Italia TIM, which meets at 1400 GMT on Friday, will discuss its impact on earnings of a soccer rights deal that has failed to help revenue and has resulted in two profit warnings at Italy's biggest phone group since July.
TIM auditors went over the 1 billion euro deal that Gubitosi struck with DAZN to stream Italy's top-flight soccer matches on Thursday and two sources close to the matter told Reuters they had raised fresh concerns.
One of the sources said that a further downgrade to TIM's financial outlook may not be ruled out, in what would be a new blow to holders of TIM debt, which is already equal to around four times its core profit.
The debt of the company, already classified as junk, was cut by the credit rating agency S&P last week.
U.S. private equity firm KKR rushed to submit its offer after the downgrade, another two people close to the matter said, adding that TIM was in danger of breaching bank covenants.
Gubitosi, who has come under attack by TIM's top investor Vivendi, has offered to give up his executive powers and stepping down as a director.
That means that his responsibilities need to be reassigned to another director, or else a board member would have to resign to free up a seat for a new CEO.
In a letter to the board, a copy of which was seen by Reuters, Gubitosi criticised directors for stalling on KKR's offer to please some of the group's shareholders.
On Thursday, the CEO told unions, who spoke out against a change at the top, that he had lost confidence of a majority of directors, a person with knowledge of the matter told Reuters.
We feel like pawns on a chessboard where giants are playing, suddenly interested in a company that was ignored for years, TIM's union representatives in Milan said.
The face-off between Gubitosi and Vivendi is the latest boardroom crisis at TIM, which has had three CEOs since 2015 when the French media group began building its 24% stake.
In the letter, Gubitosi rejected speculation that he was close to KKR and urged the board to grant the New York-based fund access to company data and appoint advisers.
TIM's board examined KKR's 10.8 billion euro $12 billion non-binding proposal to take it private on Sunday.
KKR, which valued TIM at 33 billion euros including net debt, asked for a four-week due diligence analysis.
Gubitosi brought KKR on board last year, striking a 1.8 billion euro deal that gave the fund a 37.5% stake in TIM's so-called last-mile network reaching into people's homes.
Italy is poised to spend 6.7 billion euros of the European Union recovery fund to speed up ultra-fast broadband rollout across the country, as a takeover offer for the whole of TIM comes as Italy prepares to spend 6.7 billion euros of the European Union recovery fund.
Rome has said Rome will respond to KKR's plan to upgrade its network, as Italy's main telecoms infrastructure is dependent on the fixed network, which the government wants to upgrade to fibre.
Rome has special powers to block moves on strategic companies such as TIM, but the executive of Prime Minister Mario Draghi has hailed KKR's interest as good news for Italy.
Sources said KKR, which consulted the government before it was able to present its offer, plans to carve out the network and give state investor CDP - currently TIM's second-biggest shareholder.