The new giant will use the Global Crossing name, have sales of more than $15bn, 63,000 staff and operations spanning 19 countries.

The new company will be responsible for more than 2.8m miles of fibre optic network

Denver-based US West, is the smallest of the five remaining Baby Bells which were created by the break up of the old AT&T.

Fast-growing Bermuda-based Global Crossing, is a relative youngster in the telecoms world at just two-years-old. It offers local and long distance service and also has a major underseas fibre optic network.

The growth of the Internet and international telephone traffic has triggered a growing need for undersea cables.

Merger mania

The $37bn stock deal between the two firms represents the 10th merger worth more than $10bn to have been announced in the US telecoms sector since deregulation legislation was passed in 1996.

The merger had threatened to fall apart last week when Frontier, another US telecoms company which is being bought for $11.2bn by Global Crossing, raised concerns about the merger.

However Frontier's backing is believed to have been won over the weekend.

The deal is still subject to the approval of shareholders and government regulators.

The new company will be 50% owned by Global Crossing/Frontier shareholders and 50% owned by US West shareholders.

New era communications

Management of the company will be shared between Solomon Trujillo, chairman of US West and Bob Annunziata, chief executive of Global Crossing.

Mr Annunziata said: "A decade and a half after the break-up of AT&T, competition in the telecommunications industry has spread around the world.

"Today we are joining forces with a regional Bell company that knows how to compete and offers customers a compelling array of integrated voice and data services," he said.

Solomon Trujillo said the merger would create 'a data-centric telecommunications network of the future' that could target both residential and corporate customers.

He added: "We are confident we can address any regulatory issues and gain approval for the merger on a timely basis."

The merger will be followed by the creation of two classes of stock, one reflecting the company's high-growth businesses and the other its mature local services.