Qwest Is Said to Up Bid for MCI

Qwest Communications International Inc. is raising its bid for MCI Inc. by nearly half a billion dollars in hopes of scuttling the long-distance phone company’s merger with Verizon Communications Inc., a source familiar with Qwest’s plans said Wednesday.

All three companies declined to comment on the sweetened offer, said to be worth $8.5 billion -- about $1.8 billion more than the current value of the Verizon deal.

Under terms of the Verizon-MCI deal, MCI’s board is to determine whether any rival bid is superior. If it is, Verizon would have five days to respond with a counteroffer.

Should MCI’s board either reject the new Qwest proposal or agree to an improved Verizon offer, Qwest could still try to take its offer directly to shareholders. That potential proxy battle probably would be resolved in May at the MCI shareholder meeting to vote on the deal with Verizon.

Earlier Wednesday, Verizon sent a sharply worded letter to MCI questioning Qwest’s predictions of huge savings and future growth from a potential Qwest-MCI combination, citing Qwest’s declining business and large debt load.

MCI’s shares fell 28 cents Wednesday to $23.75 on Nasdaq.

Shares of Qwest, the local phone provider in 14 states across the Rocky Mountains and Pacific Northwest, fell 4 cents to $3.82 on the New York Stock Exchange. Verizon, which dominates phone service in the Eastern United States, declined 34 cents to $35.34, also on the NYSE.

The expected bid by Qwest comes as the company wraps up two weeks of meetings with MCI.

MCI, formerly known as WorldCom and based in Ashburn, Va., rejected Qwest’s original $8-billion offer in favor of its agreement with Verizon for many of the same reasons cited in the Verizon letter.