Qwest Communications International Inc. (Q) on Thursday raised its bid for MCI Inc. (MCIP) to $9.9 billion, saying it was making its "best and final offer" after being rejected three times by the long-distance telephone company.

In its persistence to scuttle MCI's existing $7.8 billion agreement to be acquired by Verizon Communications Inc. (VZ), Qwest hiked its bid by 9 percent, increased the cash portion of the offer and gathered $1 billion in extra funding in an effort to prove its ability to finance the deal. The financing, however, still fell below what some analysts expected.

MCI has rejected Qwest's previous offers in favor of a lower $7.8 billion bid from Verizon, saying that company offered a financially stronger partner and better long-term growth opportunities.

Some large institutional investors have spoken out against the Verizon bid and urged MCI to negotiate a richer deal with Qwest (search). The counter-bid by Qwest in the range of $29-$30 a share had been expected, based on the prices at which MCI (search) and Qwest's stocks have been trading in the past week, said one trader.

Under its latest proposal, Qwest offered $30.40 per share, adding $2.50 in cash per share to its previous offer. It said had financing of $7.25 billion, and additional commitments of $800 million from major MCI shareholders that own more than 13 percent of the long-distance company. Those shareholders, who were not identified, have agreed to buy shares of Qwest at a price of $3.48 a share, Qwest said.

Qwest, the fourth-largest U.S. local telephone company, gave MCI's board until 5 p.m. on Saturday to declare its offer superior to the Verizon deal, according to the letter filed with the Securities and Exchange Commission (search).

MCI said its board would review Qwest's latest revised offer, as it has all previous proposals.

"It puts pressure on Verizon to make a counter bid, but not to bid as high as people might think," said one trader who declined to be name. "Qwest's funding comes with conditions that may be deemed too risky by MCI."

MCI's board had previously expressed concern that it would lose customers if it merged with a smaller carrier like Qwest. MCI said it feared that its financial health would deteriorate as a result, and fall to a level that would allow Qwest to call off the merger and walk away. In the latest proposal, Qwest relaxed some of its requirements about MCI's financial condition.

Verizon said it would continue "to assess the situation and intend to take the necessary steps at the appropriate time to secure shareholder approval and complete our pending transaction."

A date for MCI shareholders to vote on the Verizon deal has not been set.

"Notwithstanding the latest Qwest proposal, we continue to believe Verizon is the best partner for MCI," Verizon said.

New York-based Verizon had sparked the ire of some MCI shareholders when it agreed to pay a richer premium for the 13.4 percent stake of MCI held by Mexican tycoon Carlos Slim.

Under that deal, Slim will get $25.72 a share in cash. In addition, he will get a bonus in one year should Verizon's share price exceed $35.25. Meanwhile, other MCI shareholders will get $23.50 a share in cash and Verizon stock.

In a nod to that deal, Qwest said its $30.40 per share offer would be extended to the shares Verizon is buying from Slim.

Shares of MCI closed at $26.50, up 23 cents on Nasdaq. Shares of Qwest gained 7 cents, or 2 percent, to close at $3.61, while Verizon added 48 cents to close at $34.26. Both stocks trade on the New York Stock Exchange.