General Manager Pietro Labriola on Tuesday outlined to the company's directors a plan exploring alternative options to KKR's 10.8 billion euro ($12 billion) offer, two people familiar with the matter said, adding the board's response had been positive.
Analysts and traders said reports about a positive reception of Labriola's plan weakened the speculative appeal of TIM shares given the uncertainty on whether KKR will act on its takeover proposal.
"The daily bulletin of events, rumours and scenario permutation, and the combination of uncertainty on management and board orientation along with political interference makes investors understandably nervous," Banca Akros analysts said.
TIM shares were 3.7% lower by 1148 GMT. The stock has lost around 10% since the beginning of the week.
Labriola's standalone plan for TIM hinges around a separation of the group's infrastructure assets from its services operations, people familiar with the matter have said.
"Should TIM's board approve Labriola's split proposal, at the same time it could reject KKR's non-binding offer", Intesa Sanpaolo said in a research note.
Labriola, who is expected to be named chief executive on Friday and then put his plan to the board on March 2, is backed by TIM's single largest investor Vivendi.
Vivendi has criticised KKR's offer saying it does not sufficiently value TIM.
($1 = 0.8817 euros)
(Reporting by Elvira Pollina and Andrea Mandala; writing by Maria Pia Quaglia; editing by Valentina Za and Tomasz Janowski)