Qwest may return to MCI with an offer

Despite the appearance of finality in the merger war between Qwest Communications and Verizon Communications when Qwest withdrew from the bidding a week ago, the battle might not yet be completely over.

After last Monday’s withdrawal, several MCI shareholders met with executives from Qwest to urge them to make another bid for MCI, the second-largest long-distance carrier in the U.S., telling the executives that they feel that a merger with Qwest has a better chance to produce growth than a merger between MCI and Verizon.

In response, Qwest on Monday said that it would not re-enter the bidding unless MCI shareholders vote down the pending Verizon when they meet in June or July to act on the proposed merger. This does not seem likely to happen, however, especially since Carlos Slim sold his 13 percent share in MCI, the largest single holding in the company, to Verizon recently.

In addition, MCI’s board has endorsed Verizon bids repeatedly, saying that Verizon is more stable financially than Qwest, a smaller company with considerable debt. MCI’s board has also said that a number of large business customers have threatened to leave MCI if it makes a deal with Qwest.