According to the Wall Street Journal, Denver, Colorado-based Qwest will present a new bid to MCI’s board early this week. The revised offer will be worth more than the $24.60-a-share deal Qwest brought to the table when it proposed its first $8bn takeover bid in February.

MCI has already accepted a $6.75bn deal from New York-based Verizon Communications, but MCI obtained permission from Verizon last week to consider a renewed Qwest offer. It has until Thursday to reach a decision on the revised bid, so an increased bid by Qwest is likely to come by then.

Qwest had already sweetened its own $8bn bid with certain additional assurances including guaranteeing the value of the stock in the cash-and-paper deal.

Qwest argues that an MCI-Qwest merger would create more efficiencies in the telecommunications industry, creating $3bn in annual cost savings by removing one long-distance carrier from the field. Qwest also said a Qwest-MCI merger would face less scrutiny from government regulators than a Verizon-MCI merger because of fewer anti-competitive concerns.

MCI was thought to have turned down Qwest’s original offer, despite it being 19% higher, because of concerns about Qwest’s $17bn debt pile, its balance sheet, and the fact that its shares were less attractive than those of New York-based Verizon.

Meanwhile, one investment firm expects Qwest to sweeten its $8bn bid for MCI by $450m to $750m, putting pressure on MCI’s board to seek a better offer from Verizon. Some analysts think Verizon will have to increase its offer by at least $1bn to be assured of winning MCI.

Deutsche Bank Securities said it was basing its figures on unsubstantiated reports that imply Qwest will raise its bid for MCI from $24.60 a share to something in the $26-$27 range. The better offer also is expected to include an extra $2 a share in cash over the previous offer, the investment firm said.

The risk for Qwest now is an aggressive cash-rich counter from (Verizon), which would either take the asset from (Qwest) or force up (Qwest’s) bid to potentially uneconomical levels, Deutsche Bank wrote in its research note.

Qwest’s current bid already would give MCI shareholders 40% of the combined company, so Qwest can’t go a lot higher and still maintain control of the combined entity.