The proposed deal represents the largest takeover in history.

BellSouth Monday modestly improved its offer for Sprint, but it was bested by MCI WorldCom's sheer size and willingness to step up to the plate with a significantly improved bid. Once again, Bernard J. Ebbers, MCI WorldCom's deal-making chief executive, shook up the telecom industry with a blockbuster deal by using his highflying stock price. William Esrey, Sprint's chairman and chief executive, is expected to be chairman of the combined MCI WorldCom-Sprint.

The deal would bring together the nation's second- and third-largest long-distance carriers, with estimated revenue of about $50 billion. The two companies would have 30 per cent of the consumer long-distance market, with more than 30 million long-distance customers and a global reach from the US to Europe and Asia.

The combination would create a company with a stock-market value of $200 billion or more, making it the biggest telecommunications company in the world when its wireless assets are included.

The transaction, including the acquisition of Sprint's main phone business andits PCS wireless business, is valid at $76 a Sprint share, so long as the stock stays between $62.15 and $80.85. MCI WorldCom will issue between 0.94 and 1.2228 shares of MCI WorldCom for each Sprint share. In addition, holders of the PCS shares -- which trade as a so-called tracking stock -- will receive tracking stock in MCI WorldCom plus 0.1547 share of MCI WorldCom. MCI WorldCom will also assume $14 billion in debt and preferred stock.

MCI WorldCom's willingness to pay such a price for Sprint reflects both the desire to get bigger in long distance as well as its changing view of the need for a wireless business. Until now, Mr. Ebbers had said he didn't feel the need to own a wireless network. But with the use of wireless phone service skyrocketing to the point where users now outnumber cable subscribers, the pressure was growing on WorldCom buy its way into the market. Earlier this year, WorldCom had held unsuccessful talks to acquire Nextel Communications Inc., a nationwide wireless provider.

MCI WorldCom moved aggressively after it became clear to that camp that BellSouth could pay as much as $77 a share. The higher MCI WorldCom bid makes the purchase dilutive to cash earnings per share. But MCI WorldCom will tell Wall Street that if its stock recovers to more than $80 a share, it will have to pay only about 5 per cent more in stock than its first offer of a fixed ratio of 0.89 share of MCI WorldCom for each Sprint share.

MCI WorldCom is expected to say that the deal is only 2 per cent dilutive to cash earnings per share. Cash earnings, which is being used by acquirers more frequently, excludes goodwill charges that must be deducted from reported earnings.Throughout the weeks-long courtship, the code name for Sprint was Snow, and MCI WorldCom was dubbed White. Thus, the deal became Project Snow White. And when BellSouth jumped in at the last minute, the Atlanta-based company became Project Blue.

After news broke Monday that a deal was imminent, shares of Sprint jumped to $60.875, up $3.875 in composite New York Stock Exchange trading Monday, while MCI WorldCom climbed $1.125 to $71.625 on the Nasdaq Stock Market. BellSouth fell to $42.6875, down $2.6875 on the Big Board, while Sprint's PCS business climbed to $78.6875, up $3.1875.

Many investors said Monday they thought MCI WorldCom was the preferred buyer. Indeed, when it appeared that MCI WorldCom would be paying less than BellSouth, investors appeared to be backing an MCI WorldCom-Sprint deal because of the synergies and a perceived quicker regulatory process.