BT chief executive Philip Jansen is said to have given the board an ultimatum over his own future at the company that led to the departure of the chairman this week.
Jansen told fellow directors that he was prepared to resign unless the telecoms behemoth replaced Jan du Plessis as chairman, Sky News report.
Du Plessis stepped down from BT on Monday after less than four years in the role.
The two executives are said to have clashed over the speed of BT’s transformation, with Jansen complaining that the company was taking too long to make key strategic decisions.
A BT spokesperson said: “Jan’s decision is a personal one: after 17 years of chairing FTSE-100 companies, he has decided to retire.
“The board of BT is fully aligned on the strategy and future direction of the business.”
Du Plessis is one of Britain’s most accomplished chairmen, leading a string of FTSE 100 companies including SAB Miller and Rio Tinto. He has also served on the board of Lloyds and Marks and Spencer.
His shock departure came during a critical period for BT, which is in the middle of a radical overhaul of its business.
The company is awaiting a decision by regulator Ofcom over what returns it can make from its rollout of full-fibre broadband, while it is also facing auctions of 5G spectrum and sports rights, as well as questions over the size of its pensions deficit.
While Jansen and du Plessis are said to have a good personal relationship, insiders told Sky News the chief executive was unhappy with the professional dynamic between them and repeatedly told colleagues a change was needed.
The former state monopoly has suffered a steady decline in its share price in recent years. Its market capitalisation is now £13.8bn, little more than the £12.5bn it paid for EE in 2016.
The shrinking value has sparked speculation that the company could be vulnerable to a takeover bid, and the board has reportedly hired investors to beef up its defences against such a move.
Jansen has also been exploring a potential sale of a stake in its infrastructure division Openreach once Ofcom’s regulatory review is completed.
The unit is said to have been valued at roughly £20bn — eclipsing the stock market value of BT itself.
Earlier this year BT poached a top executive from Indian telecoms giant Bharti Airtel to help lead its digital transformation.
The company is plotting greater investment in cloud computing and hopes to use its network to offer customers new digital products and services.