British Telecommunications' shares fell yesterday amid concerns the group might have negotiated itself into a corner with a revamped $23 billion (£15.5 billion) deal with troubled American carrier MCI Communications.

BT's shares fell 22.5p to 413.5p, losing about half the gains rung up on Friday when traders, who had bet on the original deal going ahead on unchanged terms, had rushed to unwind arbitrage positions.

Analysts put down the falls to both a technical correction after Friday's gains and rising concerns that MCI is proving too risky a group for BT to invest in.

BT sparked relief on Friday when it unexpectedly announced that MCI had agreed to accept a 20 per cent price cut in merger terms following the US long-distance carrier's shock profit warning in July.

But those bearish on MCI's prospects amid growing competition in its core long-distance market said they were unpleasantly surprised by news that BT would not be able to withdraw or revise merger terms again.

BT has amended its MCI merger agreement, which it has filed with the US Securities and Exchange Commission, dropping a clause allowing it to rework the deal even if there were any further "material adverse change" in MCI's prospects.

"This is dangerous for BT as it effectively excludes any possibility of abandoning the deal," said Mr Oliver Ehrenberg, analyst at Robert Fleming.

However, he added: "Given that MCI investors might sue MCI management for accepting lower terms, BT might have felt it necessary to sweeten re-negotiations for MCI management."

Many had been so convinced that MCI's lawyers would force BT to pay up that arbitrageurs have rung up vast losses in a risky gamble on the difference between BT and MCI's shares narrowing when the deal was completed on unchanged terms.

Some analysts say MCI, which one newspaper editorial dubbed "a slightly shop-soiled American telecoms company", only agreed to a price cut because of a cunning game of bluff and public relations by the British telephone giant.

Others remain suspicious of the reason why MCI, which is due to report quarterly results at the end of October, decided to accept a lower price despite the renowned sharpness of its lawyers.

"There is a suspicion that there might be new news in next four months - judging by how quickly and to what extent MCI was seen to cave in in negotiations," noted one analyst who declined to be named.

"There is always the old adage that it is unusual for profit warnings to come in ones," he added.

Some analysts have called for BT to drop the merger after news of far greater-than-expected losses in MCI's local business and concerns about rising competition in its long-distance operations.

But few ever believed the biggest transatlantic merger on record would be abandoned despite public friction between the two groups since MCI's profit warning.

BT's top executives had staked too much prestige on a strategic deal to create one of the world's biggest telephone companies, analysts say.