By Elvira Pollina

MILAN (Reuters). Telecom Italia (MII:) will face another boardroom battle after Luigi Gubitosi, their chief executive, told them he is ready to resign if it expedites their decision about KKR’s proposed takeover.

Telecom Italia’s (TIM) board will discuss Friday at 1400 GMT the effects of a soccer rights contract on earnings. This deal has not helped revenue and caused two profit warnings to Italy’s largest telephone group.

TIM auditors reviewed the deal Gubitosi made with DAZN for streaming top-flight soccer matches in Italy on Thursday. Two sources close to this matter informed Reuters they raised new concerns.

According to one source, a new downgrade of TIM’s financial outlook could not be ruled out. TIM’s debt is approximately four times its core profits.

The company’s debt rating, already classified as “junk”, was cut further last week by ratings agency S&P.

KKR, a U.S. equity firm, rushed for its offer to be submitted after the downgrade. Another two sources close to the matter claimed that TIM was likely to breach bank covenants.

Gubitosi was attacked by Vivendi (OTC), TIM’s most prominent investor. Gubitosi offered to resign without stepping down from his position as a director.

This means that he must be transferred to another director or a member of the board would have to resign in order to make room for a new CEO.

Gubitosi criticized directors for not accepting KKR’s offer to satisfy some shareholders in a letter addressed to the board. A copy was obtained by Reuters.

STATEGIC ASSET

Gubitosi and Vivendi are the latest in a series of boardroom crises at TIM. Since 2015 when French media giant France Media Group began building its 24% stake, TIM has had three CEOs.

Gubitosi denied rumors that he was connected to KKR and urged board members to allow the New York-based fund to access company data as well as appoint advisers.

TIM’s board examined KKR’s initial 10.8 Billion Euro ($12 Billion) proposal to privatize it on Sunday.

KKR has ordered a 4-week due diligence review of TIM, asking for TIM’s 33-billion euro net debt.

Gubitosi was the one to bring KKR onto his team last year. He struck a 1.8billion euro deal which gave the fund a 37.5% interest in TIM’s network that reaches people’s homes.

Italy is about to use 6.7 billion Euros of the European Union Recovery Fund to accelerate ultra-fast broadband rollout throughout the country. This offer of takeover for TIM includes the entirety of TIM.

TIM’s fixed telecoms network, which is being upgraded to fibre by the government, is Italy’s largest. Rome said that it will base its stance about the KKR proposal on network plans.

Rome is able to stop moves against strategic companies like TIM. However, Prime Minister Mario Draghi (executive) has hailed KKR’s interest as good news.

According to sources, KKR, who consulted with the government before submitting its proposal, intends to create the network and give CDP, the second largest shareholder at TIM, a leadership role in the oversight of the asset.

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