MCI'S FALL MAY PUT BRITISH DEAL ON HOLD.

Byline: Emma Dandy Associated Press 

The pressure is on British Telecommunications PLC to renegotiate terms of its megamerger with MCI Communications Corp., which is expecting local telephone service losses to double original estimates.

Shares of British Telecom and MCI plunged Friday and analysts were calling the $27.15 billion takeover too expensive.

British Telecom said speculation was premature that it would look to cut a new deal. British Telecom was not yet worried that it might be paying too much because it had not had the opportunity to take a close look at the situation, a spokesman said.

But the company issued a statement in London saying it ``will be holding further discussions with MCI management in order fully to understand the reasons for, and extent of, the changes in MCI's prospects.''

Any renegotiation of the purchase price would come very late in the process. British Telecom and MCI shareholders have already approved the deal, and the U.S. Justice Department has given its approval. The merger, which is supposed to be completed in the fall, still needs approval from the U.S. Federal Communications Commission and state regulators.

Because of the extra costs MCI now faces in penetrating the U.S. local-services market, the British Telecom-MCI merger looks too expensive, said Mike Styles, analyst at Credit Lyonnais Laing.

British Telecom and MCI announced the merger in November. The original deal calls for British Telecom, which already owns 20 percent of MCI, to pay $6 and 0.54 of its New York-listed shares for each of the remaining MCI shares.

When the two announced the deal in November, it was worth $20.88 billion, but British Telecom's stock has climbed since then, pushing the total value past $27 billion and valuing MCI stock at $46.77 per share as of midday Friday.

MCI's stock was off $6.25 per share on the Nasdaq Stock Market Friday at $36.125 - a 15 percent drop. British Telecom, meanwhile, was down $6 at $75.50 on the New York Stock Exchange.

MCI said Thursday night it would lose about $800 million on local telephone service this year, double its previous estimates.

MCI said it's already making investments to provide local service, but the regional phone companies aren't letting it into their territories. MCI on Thursday said it wants federal and state regulators to end what it calls anti-competitive practices by the local telephone companies.

MCI's warning is just the latest expression of frustration by long-distance carriers. MCI and AT&T claim the phone companies created by the 1984 breakup of the Bell System are stalling in letting rivals into their markets.

The local telephone companies can offer long-distance service once they convince regulators they are allowing competition. Some of the local companies say long-distance providers are taking their time getting into local service to keep the Baby Bells out of long-distance.