MCI said it is once more talking with Qwest, who increased its offering for MCI to $8.9 billion, out pricing Verizon by $1.3 billion. This is the second time MCI has announced its intentions to be acquired by Verizon, only to bow out and listen to Qwest's offer.

Verizon gave MCI a temporary waiver allowing the acquisition talks with its rival to proceed. The waiver will remain in effect until MCI's stockholders vote on the initial offering from Verizon. The shareholder vote is yet to be scheduled.

Richard Notebaert, CEO of Qwest, released a forceful letter addressed to MCI's board in which he accuses its members of ''favoring one bidder over another," without taking into consideration what is in the best interest of the stockholders. "There's no rational way, no matter which part of this thing you attack, that it's not a superior bid," Notebaert said.

Verizon responded by calling into question Qwest's finances, noting Qwest's $17 billion debt and weak cash flow. "Qwest's most recent bid does nothing to address the fundamental concerns we have identified, while increasing the amount of cash to be paid out to shareholders exacerbates the risks," Verizon spokesman Peter Thonis said.

"My guess is that if MCI's board finds it attractive, you'll see a counter bid from Verizon with slightly more cash than their previous offer and Verizon will still end up with MCI," Morgan Keegan analyst Tavis McCourt said. If MCI ultimately decides to go with Qwest they will incur a $200 million "breakup" fee payable to Verizon.