Qwest Communications International Inc. (Q) said on Monday it had set an April 5 deadline for MCI Inc. (MCIP) to accept or reject its $8.45 billion bid for the company.

In a letter to MCI's board of directors, Qwest Chairman and Chief Executive Richard Notebaert (search) said Qwest had also increased the financing available for its deal by $500 million to $5.75 billion. Verizon Communications Inc. (VZ), which had agreed to buy MCI for $6.75 billion last month, had said Qwest's finances were too weak.

An MCI spokesman said the company had received Qwest's letter and would review it. MCI has said it would reply to Qwest's offer by today.

If MCI deems Qwest's offer superior to Verizon's, Verizon would have five days to respond. If Qwest succeeds, Verizon would receive a $200 million break-up fee. A Verizon spokesman said the company continues to believe its bid is superior.

Both companies see MCI as a foothold into the market for selling voice and data services to large businesses. Qwest, the fourth-largest U.S. local telephone company, also sees a chance to reduce its $17 billion debt and increase its weak cash flow through a merger with MCI.

Several large MCI shareholders have criticized the Verizon bid as too low and encouraged Qwest's bid. Verizon, the largest U.S. telecommunications company, has said its deal offered the better value to shareholders. It has criticized Qwest's estimates of financial benefits from a MCI deal, including $14.8 billion in cost savings, as "modern fiction."

Qwest's offer values MCI at $26 per share, including $10.50 in cash and $15.50 in Qwest's shares. The deal value includes a dividend that MCI paid last month, and a clause allowing Qwest to adjust the ratio of shares it issues based on its share price.

Shares of MCI fell 26 cents, or 1.1 percent, to $23 on Nasdaq.