MCI believes it will be better off under Verizon

The rebuff, the latest twist in a two-month takeover fight, reaffirms MCI's preference for a lower $7.6bn bid from rival operator Verizon.

MCI emerged from the ruins of bankrupt telecoms operator Worldcom last year.

Amid a spate of US telecoms mergers, Qwest and Verizon are both keen to win control of MCI's business providing telecom services to big corporations.

Qwest has not ruled out the possibility of launching a hostile bid.

Shareholder interests

The rejection of Qwest's offer marks the third time MCI has opted to back Verizon's bid.

We are looking forward to working with MCI's shareholders to get the deal done properly Verizon statement

The company has said its prospects were better served under Verizon, which is the largest US telecoms operator.

MCI said Qwest's offer was unpopular with its customers, and added it was concerned with cost-saving assessments attached to the bid.

"MCI was not willing to jeopardize the certainty of its Verizon agreement for the uncertainties surrounding the Qwest proposal," the company said.

However, Qwest said it believed its offer remained in the best interests of MCI's shareholders.

"We are confident that our offer is superior, and statements of support from many MCI shareowners indicate that they are in agreement with us," Qwest said.

"The company is currently weighing its options and shareholders will dictate the next steps in this process."

Deal done

Qwest earlier balked at a request from MCI, on Tuesday, to raise its takeover offer to as much as $9.9bn, or $30 a share.

Responding to MCI's decision, Verizon said: "We are pleased to see the process move to the next step, where we can begin the proxy phase of this transaction."

It added: "We are looking forward to working with MCI's shareholders to get the deal done properly."

Verizon had previously said it would not raise its bid if MCI decided to back an increased offer from Qwest.