The largest deal in British corporate history was rescued from the brink of collapse yesterday after BT negotiated a £3 billion cut in the price it will pay for US rival MCI Communications. BT said the new deal valued the 80 per cent of MCI that it did not already own at around £11 billion sterling, from around £14 billion.

The City was well pleased as shares in BT surged, adding about £1.5 billion to its £26.4 billion market value.

BT said the approximately 20 per cent cut in the price reflected "changes in the market place".

The new terms are the result of a review initiated last month when MCI warned of steep losses from its attempts to get into local phone services.

The same troubles were also blamed for a 6.7 per cent fall in second-quarter profits.

MCI, the second largest long distance carrier in the US, said last month that it would lose about £500 million this year, double its previous expectations, in its local-market campaign.

Concert is the proposed name for the merged company which will come into being at the end of 1997, according to a BT spokesperson.