BellSouth 2Q Earnings

Bellsouth Corp
25 July 2005


For Immediate Release

July 25, 2005


                  BellSouth Reports Second Quarter Earnings

•       Sequential earnings growth from continuing operations

•       Strong Cingular results drive margin improvements


ATLANTA - BellSouth Corporation (NYSE: BLS) announced second quarter 2005
earnings per share (EPS) from continuing operations of 43 cents compared to 37
cents in the first quarter of 2005 and 51 cents in the second quarter of 2004.
Normalized EPS from continuing operations was 46 cents, an increase compared to
39 cents in the first quarter of 2005 and a decline compared to 51 cents in the
second quarter of 2004.  Normalizing items in the second quarter of 2005
consisted of wireless merger integration costs (2 cents) and debt extinguishment
costs (1 cent).


"The realignment of our assets toward wireless and broadband services is
starting to pay off," said Duane Ackerman, Chairman and Chief Executive Officer.
"Cingular delivered strong growth in customers, revenues and operating
margins.  Our results this quarter clearly demonstrate how Cingular's progress
impacts BellSouth's bottom line.  Our wireline business and growing Advertising
& Publishing services delivered consistent, overall financial performance."


Normalized Results from Continuing Operations

Normalized results from continuing operations include BellSouth's 40 percent
proportionate share of Cingular's revenues and expenses.  Cingular completed its
acquisition of AT&T Wireless on Oct. 26, 2004.  Results prior to the acquisition
date have not been restated.


For the second quarter of 2005, normalized revenue was $8.52 billion, up 2.6
percent compared to the first quarter of 2005.  Operating margin was 19.2
percent, a 190 basis point improvement compared to the first quarter of 2005.
Net income was $849 million, up $131 million from the first quarter of 2005.
These improvements reflect Cingular's continued growth and merger integration
progress, stable results from Communications Group and continued Advertising &
Publishing revenue growth.


Year-over-year, second quarter 2005 normalized revenue was $8.52 billion
compared to $6.71 billion in the second quarter of 2004.  Second quarter
normalized net income decreased $89 million compared to $938 million in the
second quarter of 2004, impacted by a decline in core voice revenues and higher
retiree medical expense in the Communications Group and financing costs
associated with the acquisition of AT&T Wireless.  Year-over-year, Cingular's
higher operating income before depreciation and amortization offset increased
intangible amortization expense related to the acquisition of AT&T Wireless.


Reported Results from Continuing Operations

For the second quarter of 2005, BellSouth's consolidated reported revenue from
continuing operations totaled $5.14 billion, an increase of 1.2 percent compared
to the same quarter of 2004.  Income from continuing operations was $795 million
compared to $939 million in the same quarter of the previous year.  In addition
to the items noted above, the comparison of period-to-period reported results
was negatively impacted by wireless merger integration costs associated with the
acquisition of AT&T Wireless.


Operating free cash flow (defined as net cash provided by operating activities
less capital expenditures) was $1.3 billion for the second quarter of 2005.  In
June, the Company increased the dividend by more than 7 percent to 29 cents per
share quarterly or $1.16 per share annually.  Over the last three years,
BellSouth has raised the quarterly dividend a total of 53 percent.  Capital
expenditures for the second quarter of 2005 were $829 million.  In addition, the
Company has paid down $2.9 billion in debt since the beginning of 2005.


Communications Group

In the second quarter of 2005, Communications Group revenue remained stable at
$4.62 billion, a slight increase compared to the same quarter of 2004.  Revenue
growth from long distance, DSL and small business access line gains effectively
offset revenue declines from residential access line loss and large business
services.  Second quarter operating margin was 23.6 percent compared to 25.0
percent for the full year of 2004.


As of June 30, 2005, total access lines were 20.8 million, down 419,000 compared
to the first quarter of 2005.  Access line loss was driven by wireless
substitution, competition and seasonal household moves that traditionally affect
the second quarter.  UNE-P access lines resold by BellSouth competitors were
down 235,000 compared to the first quarter of 2005. Residential retail access
lines were down 204,000.  In contrast, business retail access lines held steady,
boosted by 33,000 net new access lines in the small business segment.


BellSouth long distance customers reached 53 percent penetration of its
mass-market customer base.  The Company added 301,000 net mass-market long
distance customers during the second quarter of 2005, and now serves nearly 6.8
million mass-market long distance customers.  New and existing customers
continue to choose BellSouth as their long distance provider.  With many
residential and small business customers choosing unlimited long distance and
international calling plans, average revenue per user (ARPU) is about $17 per
month.


Driven by DSL, network data revenue for the second quarter was $1.17 billion, an
increase of 4.5 percent compared to the same quarter of 2004.   BellSouth now
serves more than 2.4 million DSL subscribers.   During the second quarter of
2005, BellSouth added 124,000 net DSL customers.  Net customer additions
declined compared to the first quarter of 2005, impacted by changes in
promotional activity during the first quarter and traditional seasonal slowing.
Increasing broadband penetration remains a priority for BellSouth.


An additional 80,000 customers added DIRECTV(R) service to their communications
packages during the second quarter, bringing the total number of customers with
this package to 394,000.  Through our successful alliance with DIRECTV(R),
BellSouth provides competitively priced packages that include wireline and
wireless voice, Internet access and entertainment services.



Cingular Wireless

Cingular Wireless, the nation's largest wireless provider, added approximately
1.1 million net customers in the second quarter of 2005, bringing its nationwide
customer base to 51.6 million customers.  Cingular's gross customer additions in
the second quarter were 4.4 million, demonstrating continued success in the
marketplace. Overall churn remained at 2.2 percent in the second quarter of
2005, and postpaid churn improved sequentially by 10 basis points to 1.8
percent.

Cingular's reported revenue was $8.6 billion for the second quarter of 2005,
representing a 5.4 percent increase over pro forma revenue from the prior year
period and a 4.6 percent sequential increase.  BellSouth's normalized revenue
includes its 40 percent share of Cingular's reported revenue.

Service ARPU (average revenue per user) in the second quarter was $50.43, a
decline of 5.6 percent from the prior year (pro forma) and a sequential increase
of 1.7 percent from this year's first quarter ARPU.  ARPU from data services
continued to grow in the second quarter reaching $4.16, a 46 cent increase from
the previous quarter.  This increase was driven by customer usage of text
messaging, downloadable ringtones, games and many other wireless applications.


Cingular's second quarter normalized service margin from operating income before
depreciation and amortization (OIBDA) was 28.9 percent, 340 basis points better
than the first quarter of 2005.  This increase was driven by improved revenue
growth, lower gross customer additions and customer upgrades and operational
efficiencies associated with merger synergies.



During the second quarter, 78 percent of Cingular's subscriber base was
GSM-equipped, up from 72 percent in the first quarter of 2005.  In addition, an
impressive 90 percent of the company's total combined minutes are now carried on
its GSM network.  Through roaming partners, Cingular now has coverage in more
than 170 countries worldwide.  Cingular is on track to launch UMTS/HSDPA in
15-20 markets by the end of 2005.  This next-generation technology provides
superior speeds for data and video services.


Advertising & Publishing

In the second quarter of 2005, Advertising & Publishing continued to grow
revenue.  Revenue was $531 million, a 3.9 percent increase over the same quarter
of 2004, and operating margin was 46.1 percent. Segment net income was $154
million, up $4 million compared to the second quarter of 2004.



Normalizing Items

In the second quarter of 2005, the difference between reported (GAAP) EPS from
continuing operations and normalized EPS is shown in the following table:


                                                                                   2Q05          2Q04

GAAP Diluted EPS - Income from continuing operations                               $0.43         $0.51

Wireless merger integration costs                                                  $0.02

Debt extinguishment costs                                                          $0.01

Normalized Diluted EPS - Income from continuing operations                         $0.46         $0.51



Wireless merger integration costs - Represents BellSouth's 40 percent share of
tax-effected wireless merger integration costs of $204 million incurred during
the second quarter 2005 in connection with the Cingular/ AT&T Wireless merger.
Integration costs include one-time cash outlays or specified non-cash charges,
including accelerated depreciation directly related to rationalization of the
wireless network, sales distribution channels, the workforce, information
technology systems and real estate.



Debt extinguishment costs - Represents one-time expenses associated with the
early extinguishment of $300 million of long-term debt in second quarter of
2005.




About BellSouth Corporation

BellSouth Corporation is a Fortune 100 communications company headquartered in
Atlanta, Georgia. BellSouth has joint control and 40 percent ownership of
Cingular Wireless, the nation's largest wireless voice and data provider with
more than 50 million customers.



Backed by award winning customer service, BellSouth offers the most
comprehensive and innovative package of voice and data services available in the
market. Through BellSouth Answers(R), residential and small business customers
can bundle their local and long distance service with dial-up and high-speed DSL
Internet access, satellite television and Cingular(R) Wireless service. For
businesses, BellSouth provides secure, reliable local and long distance voice
and data networking solutions. BellSouth also offers online and directory
advertising through BellSouth(R) RealPages.com(R) and The Real Yellow Pages(R).



BellSouth believes that diversity and fostering an inclusive environment are
critical in maintaining a competitive advantage in today's global marketplace.
More information about BellSouth can be found at www.bellsouth.com.



Further information about BellSouth and Cingular's Second quarter earnings can
be accessed at www.bellsouth.com/investor.  The press release, financial
statements and Investor News summarizing highlights of the quarter are available
on the BellSouth Investor Relations website starting today at 8 a.m. Eastern
Time (ET).



BellSouth will host a conference call with investors today at 10 a.m. (ET).

Dial-in information for the conference call is as follows:

Domestic:  888-370-1863

International:  706-634-1735



The conference call will also be webcast live beginning at 10 a.m. (ET) on our
website at www.bellsouth.com/investor.  The webcast will be archived on our
website beginning at approximately 1 p.m. (ET) today.



A replay of the call will be available beginning at approximately 1 p.m. (ET)
today, through August 1, 2005, and can be accessed by dialing:

Domestic:  800-642-1687 - Conference ID: 4107471

International:  706-645-9291 - Conference ID: 4107471



In addition to historical information, this document may contain forward-looking
statements regarding events and financial trends. Factors that could affect
future results and could cause actual results to differ materially from those
expressed or implied in the forward-looking statements include: (i) a change in
economic conditions in markets where we operate or have material investments
which would affect demand for our services; (ii) the intensity of competitive
activity and its resulting impact on pricing strategies and new product
offerings; (iii) higher than anticipated cash requirements for investments, new
business initiatives and acquisitions; (iv) unfavorable regulatory actions; and
(v) those factors contained in the Company's periodic reports filed with the
SEC. The forward-looking information in this document is given as of this date
only, and BellSouth assumes no duty to update this information.

This document may also contain certain non-GAAP financial measures. The most
directly comparable GAAP financial measures, and a full reconciliation of
non-GAAP to GAAP financial information, are attached hereto and provided on the
Company's investor relations website, www.bellsouth.com/investor.

For More Information Contact:

Jeff Battcher, Media Relations at 404-249-2793

BellSouth Investor Relations at 800-241-3419




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