The department of justice has concerns that the deal, combining the No 2 and No 3 long-distance phone carriers, would reduce competition in the Internet and long-distance markets and could hurt consumers.

European regulators, meanwhile, are studying whether the deal would harm competition in the market of supplying communications services to multinational companies.

Although there has been much media and industry speculation that regulators may require WorldCom to shed UUNet, the company said it would never submit to such a concession.

When asked what conditions would threaten the deal, WorldCom vice chairman John Sidgmore said "UUNet is a bright line issue (because) it really is the centrepiece of our forward (growth) strategy."

WorldCom's senior officers have been meeting with justice department officials in recent weeks to address potential concessions or remedies that would ease the competitive concerns and allow the deal to proceed.Sidgmore said these talks have accelerated but he declined to discuss the specifics of the negotiations.

"On balance, we're feeling better after the last few weeks than we did before...I remain optimistic that we're going to get the deal done," Sidgmore told investors at a PaineWebber conference in New York.

The two companies have already said they would be willing to divest Sprint's Internet operations to win regulatory approval, but they will likely be forced to shed some long-distance telephone assets as well, other WorldCom executives have said.